WASHINGTON, Pennsylvania—Janet Stechly, a retired schoolteacher, and her husband, a retired coal miner, pore over every monthly expense. One of the most confounding is the monthly natural gas bill for their small townhouse in southwestern Pennsylvania.
Their March bill from Columbia Gas of Pennsylvania totaled $95.17, but only $13.99 of that was for the gas itself. The other $81.18 covered delivery ($40.68) and a series of hard-to-decipher items including a “customer charge” ($20.15), “pass-through charges” ($13.37), and a “weather normalization adjustment” ($6.60) that was included because warm weather meant the Stechlys had used less gas than expected.
The retirees in this small town in western Pennsylvania will likely face even higher gas delivery charges in years to come as more power-hungry data centers are built in the region to accommodate the burgeoning era of AI. While public protests over higher electricity bills, water use, and noise caused by the buildout of data centers have erupted in several states, consumers are less aware of the effect on their natural gas bills.
Gas bills are expected to jump in Pennsylvania and other states because ratepayers cover the costs when utilities build new power plants and install pipes and other equipment, according to Arif Gasilov, who leads the energy regulatory practice at Gasilov Group. And this buildout is now gaining steam to produce the power that data centers will need. “The price increases related to some of that buildout will show up as delivery and demand charges on your gas bill and capacity charges on your electric bill,” he said.
This year, the municipalities around the Stechlys’ town of Washington have been writing data center rules to mitigate their environmental impact. An hour’s drive to the east, the largest planned gas plant in the country will go up in Indiana County to help serve data centers, and developers are eyeing sites in the counties next door – developments that the Stechlys and other residents of this rural region increasingly oppose.
“We’ve got enough going on out here,” Janet Stechly, 77, said. “And I know who ends up paying for it: me, on a fixed income.”
Gas Is the Cheap Part
As this family’s experience illustrates, increasing gas bills have nothing to do with the price of gas itself. Nationwide, the American Gas Association reports, actual fuel itself accounts for only 31% of the average bill. It is even lower for the Stechlys, who live in the most-drilled county in Pennsylvania. Washington County has 2,148 unconventional gas wells, more than any other county in the state. All told, they produced 1.15 trillion cubic feet of gas last year.
The price of the abundant commodity in this region is relatively low, and economists say it will remain so for some time. The expensive part is the plants, pipes, and wires that utilities install to serve new demand, and the companies recover those costs from every customer on the system with a guaranteed return, over decades, set by the state Public Utilities Commission (PUC). And those charges to consumers arrive whether or not the infrastructure is actually used to meet anticipated demand.
Like other utilities, Columbia Gas of Pennsylvania, which serves 445,000 customers in 26 counties, makes nothing on the gas itself; it buys the fuel and passes on the costs to ratepayers.
“Natural gas itself is completely unregulated. That’s the cheap part of it,” said Dale Nesbitt, president of ArrowHead Economics and a Stanford-trained economist who has modeled energy markets since 1974. “The pipe is regulated. That’s where you’re getting screwed. That’s where the fees are fixed.”
Columbia Gas’s delivery rates were climbing before any data center broke ground in Pennsylvania, as the state utilities commission approved a $55.6 million increase that took effect Jan. 1.
Analysts, however, expect data centers to drive rate increases in coming years. Western Pennsylvania has seen this pattern before. During the first shale buildout two decades ago, gas got cheaper – because there was more of it – and then delivery charges went up anyway.
The commodity’s share of an average Columbia Gas bill fell from 54% to 21% between 2006 and 2021, according to data compiled by the Pittsburgh Post-Gazette. Over those same 15 years, Columbia Gas roughly doubled its base rate charges, in part to fund infrastructure programs that included $2.5 billion in distribution spending since 2007.
“Gas could drop to zero and the bill would still go up, because of how utilities work,” Gasilov said. “They recover all their costs from all their consumers. That’s the whole model.”
Data Center Pressures
More plants are coming, so those costs can be expected to continue rising.Patrick Henderson, vice president of government affairs at the Marcellus Shale Coalition, said about 15 new and converted gas plants were built in Pennsylvania from 2012 to 2019 before development stalled. Then this year, the announcement that a coal plant in Homer City would be converted into the largest gas plant in the country by 2029 marked the beginning of a new wave of construction to support data centers.
Shawn Steffee, business agent for Boilermakers Local 154, said other natural gas plants may be developed to support data centers closer to the Stechlys’ home in Washington. “We see the potential of the Project Hummingbird, which is electric generation in Greene County,” he said. He also named the shuttered Bruce Mansfield plant in Beaver County as a candidate for revival.
These and other expected new power plants will feed electricity to PJM, the regional grid operator for Pennsylvania and a dozen other states. For 2028-29, data centers are expected to draw about 38% of the grid’s juice, said Joseph Bowring, president of Monitoring Analytics, the grid’s independent market monitor. The grid operator expects 32 gigawatts of new peak demand by 2030, about 30 of them from data centers.
“Whether that demand actually materializes or not, people are already paying for it,” Gasilov, the analyst, said. “The bill for the forecast arrives before you can tell whether the forecast is right.”
Barbara Kates-Garnick, a professor of practice in energy policy at Tufts University’s Fletcher School, said there are limits to what consumers will have to pay for the power plant buildout. Infrastructure dedicated to serving data centers generally will not be picked up by common ratepayers. But there are shared investments in the system, such as pipes for increased gas transmission, that will get baked into rate increases, Kates-Garnick said.
Darryl Lawrence, Pennsylvania’s consumer advocate whose office represents ratepayers, agreed that the cost concerns for consumers reside in these shared upgrades. “A dedicated lateral to a plant is what the developer pays for,” he said. “A compressor station the utility says improves reliability for everyone, everyone pays for that.”
What’s unclear is how big the rate increases will be for consumers. That depends on which plants get built, which pipes a utility puts into its rate base, and what the PUC allows it to recover. These decisions will be made case by case over the next several years.
Local Resistance
The proposals for more data centers in western Pennsylvania have drawn a mixed reaction from residents and local politicians. Politicians such as Washington County Commissioners Chairman Nick Sherman are advocating for the facilities to bring investment, jobs, and tax revenue to the region.
Sherman called the Zediker Station site in South Strabane “primed for development” when a 1,400-acre tract there was marketed to data center developers last fall. He estimated a project could bring 300 to 400 union construction jobs.
Locals who oppose data centers are resigned to trying to dampen the harmful effects through zoning regulations. But local power stops short of a ban, which only the state can impose.
“The only people who don’t have issues with data centers are people who don’t live anywhere near them,” said Judy Penasik at a hearing in South Strabane Township, which borders the Stechlys’ hometown.
In June, after more than six months of hearings, the supervisors approved data center restrictions, including a 1,500-foot setback from homes, a 30-acre minimum lot and noise and dust rules. More than 70 people packed the hearing.
Supervisor Jeff Bull told RealClearInvestigations that the ordinances can protect a neighborhood and nothing more. “What we can control is what gets built next to somebody’s house, and the environmental impact of that,” he said.
While state lawmakers push legislation to temporarily pause the construction of new data centers, none of these local and statewide measures deal with the rising costs that likely will be found on the gas bills of residents like the Stechlys.
“The energy issues are decided at the PUC in complex hearings involving many experts and consultants under a long-standing legal framework that is difficult for the individual to understand and to fight,” Tufts’ Kates-Garnick said.
Gasilov, the analyst, says local residents have very little say in these important decisions over rates at PUC meetings. “Almost nobody shows up to those,” he said.
Tech Titans Pledge To Pay
Whether all these announced gas plants and data center campuses get built is another issue.
“In the merchant power business, about five percent of the stuff gets built,” said Nesbitt of Arrowhead Economics, who was part of many of those projects. “Pipeline expansions, generation, all of it. Five percent.”
Even if the percentage in the AI era is much higher, given the remarkably heavy investment in data centers, some projects will likely die, and ratepayers may still foot the bill. “If assets were approved, and the capital expenditure was placed into the rate base, stranded assets would impact residential customers,” wrote Michael Strickland, an energy broker in Dallas. “They would be ‘paying’ for these stranded or unused assets.”
An obvious solution to rising rates for consumers is for the data center developers to provide their own power. Nesbitt said some developers in Texas are “building strictly off-grid power to avoid regulation,” although how this will interface with existing transmission capacity to ratepayers won’t be clear until the construction is finished.
In March, Alphabet, Meta, Microsoft, and other data center companies pledged at the White House to protect consumers from price increases tied to their energy needs. But Bowring of Monitoring Analytics said the pledge cannot be kept under grid operators’ current rules. “There’s only one way to do what hyperscalers agree is the right thing to do, and that is to run a separate auction for their own power,” he said.
Conor Lamb, a former Democratic congressman who represented Washington County, said the pressure to make companies pay their own way “has not really been brought to bear on them all that effectively.” The goal is “to get the onus back on the companies to power their data centers behind the meter so that they’re not raising prices for you,” he said.
At the Stechlys’ home, the couple will grudgingly closely examine their next gas bill as they have the others. But they know what to expect. “Those charges never go down,” Janet said. “I feel like I pay a lot for nothing.”
Asked whether most people she knows understand their gas bill and why it may soon go up again, she replied: “I was a schoolteacher. So, of course I know how much they don’t know. But I do think a lot of us retired folks know it’s going to be worse than we expect.”
Correction: A previous version of this article included a quotation incorrectly attributed to Columbia Gas of Pennsylvania spokesperson Lee Gierczynski. The quotation has been removed.
This article was originally published by RealClearInvestigations and made available via RealClearWire.
