Earlier this week, the Virginia Senate proposed SB 253 – “The Fair and Affordable Electric Rates Reliability Act.” This bill joins other states that are looking for solutions to ever-increasing electric bills and that are targeting data centers as the perceived party that is causing the rate increases.
It is a bit too early to tell if SB 253 makes its way through the legislature, but it is indicative of approaches being considered and acted upon by various states. SB 253, which is supported by Dominion Energy (a large power generator in Virginia and beyond), would shift the way certain large consumers pay for electricity. Dominion Energy is a power supplier and creates its own energy at the power plants it owns and controls, but then goes to the open market to buy electricity from the grid at auction for any excess capacity it needs and then allocates these excess costs to its customers who use the electricity.
Read Brad Molotsky’s full analysis of the bill on the Project Development/Infrastructure/P3 Blog.
As data center projects proliferate in the United States to meet the growing demands of IT housing infrastructure, particularly in the face of rising AI usage, energy demands rise (and are expected to continue to grow), but so do the potential investments. Data centers are particularly energy-hungry, and the states are responding.
In Pennsylvania, Senate Bill No. 939 (the Artificial Intelligence and Data Center Act) was introduced on July 14, 2025. The Artificial Intelligence and Data Center Act establishes a state Office of Transformation and Opportunity and creates a regulatory sandbox program to allow for testing of data centers and high-impact data centers (a data center with a critical IT load of 50 MW or higher). If approved, tech companies would be able to temporarily test AI and data center technology with fewer approvals through fast-tracked permitting and the promise to keep municipal governments at bay on imposing strict local guidelines. Senate Bill No. 939 is currently with the Pennsylvania Senate Communications & Technology Committee.
In Delaware, Senate Bill 205 was introduced in late September to require any person or entity to begin the business of using 30 MW or greater of electricity to first obtain a Certificate to Operate (COP) from the Delaware Public Service Commission (DE PSC). On October 15, 2025, on the heels of Senate Bill 205 in Delaware, the DE PSC approved an order to open a docket to “address concerns regarding increased electric transmission and distribution costs to existing ratepayers and reliability concerns… namely for customers that will use a monthly maximum demand of 25 MW or greater” in the Delmarva Power & Light service territory and noted that these customers “need to be treated as a separate class within the current rate structure…” Docket No. 25-0826, Order No. 10826 (Oct. 15, 2025). Until a tariff is in place, interconnection of any large load customers will be paused.
In the same DE PSC meeting where Order No. 10826 was approved, the DE PSC noted the issue of data centers requiring a tremendous amount of power, while the rate of growth for new generation is relatively slow due to supply chain constraints, logistics and permitting. The DE PSC recognized that centers in the PJM footprint, even Virginia, could and likely would impact the state of Delaware. Senate Bill 205 awaits consideration by the Senate Environment, Energy & Transportation Committee.
On October 24, 2025, a New York State Bill (Senate Bill S8546) was introduced that would require the Public Service Commission (NY PSC) to establish a grid modernization surcharge on utilities for energy use of data centers. A data center would be considered any IT load exceeding 10 MW of demand. A high-intensity data center would mean a data center with an annual power-usage effectiveness greater than 1.3 or an annual electricity consumption greater than 50 gigawatt-hours. The surcharges would be put into a “grid modernization fund.” If Senate Bill S8546 were to go through, the NY PSC would then likely open a docket to establish specifics as to the surcharge and its application.
Meanwhile, in New Jersey, Governor Phil Murphy conditionally vetoed legislation, S-2493, on October 20, 2025, that would require the owners or operators of data centers to submit water and energy usage to the New Jersey Board of Public Utilities (BPU). Disagreement ensues on the potential delay of the bill, where reporting would have originally been required within six months of the bill’s signing. The governor’s conditional veto would extend the required reports to January 2027. Instead, the governor recommended that the New Jersey Legislature amend an existing law (P.L.2025, c.98), which directs the BPU to study the data centers’ effects on electricity costs for New Jersey residents and evaluate the potential for a tariff. On the reporting requirements of S-2493, the governor suggested deferring to the BPU to decide whether such reporting would be necessary in the future.
On October 23, 2025, U.S. Energy Secretary Chris Wright issued an advance notice of proposed rulemaking (ANOPR) directing the Federal Energy Regulatory Commission (FERC) to develop rules for interconnecting large electric customers, such as data centers and hybrid facilities (i.e., combining a generator and a large load) that have peak demand of 20 megawatts (MW) or higher. Large load interconnections, especially those involving data centers and their colocation with generating resources, currently are a hot topic in several pending FERC proceedings involving proposals by individual utilities and regional transmission organizations (RTOs), as well as various generic inquiries. Due to their size and rapid growth, these facilities strain the interstate electric grid, resulting in reliability issues and requiring expensive transmission system upgrades. To respond to these challenges, the ANOPR initiates a rulemaking to develop a standardized set of procedures that would be applicable across the board, on a more or less uniform basis, to all “public utilities” and RTOs with FERC open access tariffs.
Over time, I have noticed that colleagues and friends have a passing interest and knowledge base regarding where we get our energy from and how we use it in the United States. Folks are interested in learning but are not sure where to look. Given this, we have decided to kick off an introductory series for those interested in learning more about energy, the players in the energy arena, energy policy both federal and state, and technology involving energy.
If you are a 301 or 401 student, this is NOT the place for you, even though you are always welcome.
The US energy mix (i.e., where we get our energy from and how we use it) is primarily composed of fossil fuels, with petroleum being the largest source (36%), natural gas being the second largest source (31%), followed by coal (13%), making up approximately 79% of total primary energy production; renewable energy sources like solar, geothermal, hydro and wind accounting for approximately 14% (but showing continued growth), with nuclear power also contributing approximately 7% to the source of power.
Sources focus on where our energy comes from. Uses focus on how energy is used.
Sources of Energy in the United States:
Petroleum is the top source of energy in the US, accounting for approximately 38% of total source energy; petroleum is primarily used in the transportation sector and the industrial sectors to run motor vehicles and equipment.
Natural gas is the second highest source of energy in the US, accounting for around 31% of total primary energy production; natural gas is primarily used in the industrial sector, the residential, commercial sectors and to a great degree in the creation of electricity.
Nuclear power is a significant contributor to electricity generation in the US.
Renewable energy growth – Renewable energy sources like solar, hydro, geothermal and wind are and have been continuing to increase their share in the US energy mix. Their use continues to increase and expand over time with increased creation being used in electric generation and industrial use for power.
Coal – while reducing in overall use as time marches on, coal continues to be used as a back up source of power to create electricity and commercial buildings as a source of heat.
The breakdown of what sources of energy are used to create electricity in the US are as follows:
Natural gas: 43% – a naturally occurring fossil fuel found underground; used in electric power creation, industry, residential, commercial buildings, and transportation; production has increased 90% in the US since 2008; The power sector continues to be a huge consumer of natural gas.
Renewable energy: 21% – includes hydroelectric, solar, wind as well as geothermal; in 2022, renewable energy generation surpassed coal as a source of energy for the first time in history; US electric production.
Nuclear power: 19% – contributed nearly 20% of the electric power generated in the US; used to produce reliable, low-carbon energy;
Coal: 16% – found underground in sedimentary deposits; continues to diminish in use even though a relatively cheap source of power given its impact on the workers who mine it and the air quality around areas that use it; nearly all coal that is mined in the US is used to create electricity; and
Petroleum (crude oil): .4% – per Statista, petroleum is the primary source of energy in the US; it is a naturally occurring fossil fuel found underground; refined into gasoline, diesel, jet fuel and other fuels. The biggest use of petroleum products is in fuel for vehicles, planes and ships.
Electricity Generation –
In 2023, approximately 4,178 billion kilowatt hours (kWh) (or about 4.18 trillion kWh) of electricity were generated at utility-scale electricity generation facilities in the United States[i]. About 60% of this electricity generation was from fossil fuels—coal, natural gas, petroleum, and other gases. About 19% was from nuclear energy, and about 21% was from renewable energy sources.
The U.S. Energy Information Administration estimates that an additional 73.62 billion kWh of electricity generation was from small-scale solar photovoltaic systems in 2023.[ii]
U.S. utility-scale electricity generation by source, amount, and share of total in 2023
Data source: U.S. Energy Information Administration, Electric Power Monthly, February 2024; preliminary data
Electricity Consumption in the US:
After decades of flat electricity consumption, US energy demand is now projected to increase from between 24 to 29% by 2035, nearly twice the rate estimated in 2023. A combination of new investments in AI data centers, manufacturing, and broader electrification are the primary drivers behind this projected increase, with data centers accounting for 30% of the expected growth, according to a Goldman Sachs report in April 2024. One estimate suggests that data centers alone could consume 9% of total US electricity generation by 2030 (up from 4% today).
Energy Uses in the United States
There are generally five energy consuming sectors in the US:
The industrial sector consumes approximately 35% of all energy consumption, including electricity; this sector includes facilities and equipment used for manufacturing, agriculture, mining, and construction. The largest contributor of power to this sector is natural gas.
The transportation sector consumes approximately 37% of all energy consumption, including electricity; this sector includes vehicles that transport people or goods, such as cars, trucks, buses, motorcycles, trains, aircraft, boats, barges, and ships. Note that the lion’s share of petroleum uses are consumed in transportation related activities.
The residential sector consumes approximately 16% of all energy consumption, including electricity; consists of homes and apartments.
The commercial sector consumes approximately 12% of all energy consumption, including electricity and includes offices, malls, stores, schools, hospitals, hotels, warehouses, restaurants, and places of worship and public assembly.
The electric power sector consumes primary energy to generate most of the electricity consumed by the other four sectors.
If you have additional energy topics you would like to see us explore, feel free to drop me a note at bamolotsky@duanemorris.com and we would be happy to add it to our growing list of things folks are asking for information about.
Duane Morris has a robust industry facing Energy and Environmental Group focused on incentives, regulatory, permitting, financing and development of energy projects internationally including renewables, solar, wind, geothermal and power purchase agreements and P-3 procurements. If you have any questions or follow ups, please do not hesitate to contact Brad A. Molotsky, Brad Thompson, Phil Cha, Shelton Vaughan or the lawyer in the firm whom you normally deal with on other matters.
[i] Utility-scale electricity generation is electricity generation from power plants with at least one megawatt (or 1,000 kilowatts) of total electricity generating capacity. Data is for net electricity generation. From USEIA data set.
[ii] Small-scale solar photovoltaic (PV) systems are electricity generators with less than one megawatt (MW) of electricity generating capacity, which are not connected at a power plant that has a combined capacity of one MW or larger. Most small-scale PV systems are at or near the location where the electricity is consumed and many are net metered systems. Smaller PV systems are usually installed on building rooftops or parking lots. From USEIA data set.
[iii] Other (utility-scale) sources includes non-biogenic municipal solid waste, batteries, hydrogen, purchased steam, sulfur, tire-derived fuel, and other miscellaneous energy sources. From USEIA data set.
