It’s not every day that out-of-state lawyers sue to protect ratepayers in your state.
In September, West Virginia Attorney General JB McCuskey sued the Pennsylvania Public Utility Commission over Pennsylvania’s Alternative Energy Portfolio Standards (AEPS), arguing that the program’s in-state restrictions on eligible power plants violate the U.S. Constitution’s Commerce Clause.
West Virginia’s complaint says it plainly: “The acts serve no legitimate environmental purpose, nor do they advance the welfare of Pennsylvania’s citizens.”
AEPS is expensive. In 2025 alone, it cost about $700 million, or $4.11 a month for a household using 800 kWh. AEPS requires Pennsylvania utilities and competitive suppliers to buy credits for about 18% of the electricity they sell. These credits subsidize an eclectic mix of “alternative energy sources.” Each megawatt-hour from a qualifying plant creates one credit.
The 18% mandate is split into two tiers.
Tier I includes a 0.5% solar energy mandate, limited to Pennsylvania facilities since 2017. It also includes a 7.79% requirement for electricity from wind, solar, low-impact hydropower, landfill gas, biomass, and coal-mine methane, which facilities anywhere in the PJM Interconnection region can supply.
Tier II covers the remaining 10%. Qualifying energy sources include waste coal, large hydropower, pumped storage, trash incinerators, and energy efficiency. But in 2020, under Act 114, lawmakers restricted Tier II credits to Pennsylvania facilities.
West Virginia’s lawsuit challenges the two closed markets: the Tier 1 solar carveout and all Tier 2 sources. These markets account for more than half the program’s cost. Even if it wins, AEPS will continue to drive up electricity bills. The open Tier I market cost Pennsylvanians about $311 million in 2025.
Since 2020, Tier II credit prices grew fourteenfold, from $1.92 to $26.92. Even the Pennsylvania Public Utility Commission has doubts. In its 2025 report on AEPS, it concluded that “a reassessment of Act 114 is appropriate.”
Tier I credits are already scarce, and growing demand in Pennsylvania will only make them scarcer. With nine other states and D.C. competing for the same credits, prices have risen 357% since 2019, according to a new report from Always On Energy Research.
Tier II shows what a closed border costs. Closing the border on Tier I credits would add about another $12 a year to a typical household bill, on top of the $49 families already pay for AEPS.
AEPS is one piece of a bigger problem. Since 2005, the mandate has added more than $3.3 billion to Pennsylvanians’ utility bills. And the cost will continue to climb. Because the mandate applies to a percentage of electricity sold by utilities and competitive suppliers, costs rise automatically as Pennsylvanians use more electricity.
Pennsylvania sits on some of the country’s richest energy resources and exports more electricity than any other state. Yet residential electricity prices rose by 45% from 2018 to 2025—faster than in Ohio, Virginia, or the rest of PJM.
Some of the pressure is regional: restrictive permitting, a backlogged interconnection queue, and carbon-pricing programs in several PJM states have constrained new supply, driving capacity prices sharply higher as data center demand grows. The Pennsylvania Public Utility Commission’s own study warns that PJM could miss its reliability standard every year through 2030.
But Pennsylvania policymakers are making it worse by layering on taxes and mandates—and families are paying for it on their electric bills. State policies are squandering Pennsylvania’s birthright. Since 2018, Pennsylvania has climbed from the 21st to the 16th most expensive state for electricity, according to a state-by-state policy index from Always On Energy Research and the Institute for Energy Research.
Pennsylvania’s power suppliers should earn their revenue competitively. They can do this by meeting the consumer demand here and in other states, not by lobbying legislators for special favors.
Affordable energy begins with Pennsylvania repealing AEPS, or at the very least capping its cost, before the bill grows any larger.
Repeal has precedent. West Virginia scrapped its own mandate in 2015, and Ohio chose a wind-down set to expire at the end of this year. Pennsylvania must continue to build on its success exiting costly carbon-control schemes (e.g., the Regional Greenhouse Gas Initiative, or RGGI) and ensure energy abundance for generations to come.
Joshua Schubert is a policy analyst at the Commonwealth Foundation, Pennsylvania’s free-market think tank.
This article was originally published by RealClearEnergy and made available via RealClearWire.