What Businesses Need to Know About PA’s Latest Energy Moves

Last week, Gov. Josh Shapiro announced a new energy strategy that includes new tax incentives and permitting reforms aimed at attracting investment. However, these reforms were linked to a new cap-and-tax emissions program that business leaders have warned will increase costs. Also last week, the Shapiro administration reached an agreement with PJM Interconnection to lower wholesale electricity price caps, a move that is projected to save ratepayers money, but which was generally viewed by industry experts as a temporary fix to a long-term and significant capacity problem.

 

 

What’s in the Governor’s Plan?

Shapiro’s “Lightning Plan” includes measures designed to boost Pennsylvania’s energy sector:

  • Tax Incentives: Up to $100 million per facility for baseload energy projects, $49 million for hydrogen hubs, and $15 million for sustainable aviation fuel development.
  • Permitting Reforms: A new RESET Board to speed up project approvals and reduce bureaucratic delays.

However, the plan also proposes the Pennsylvania Climate Emissions Reduction (PACER) program, a carbon cap-and-tax system that would set a limit on carbon emissions and require companies to purchase allowances. Shapiro has previously pitched the program as a state-specific alternative to the Regional Greenhouse Gas Initiative (RGGI), and last week pledged to “immediately withdraw” Pennsylvania from RGGI if the legislature were to pass his PACER plan.

PA Chamber Responds

In a statement, PA Chamber President & CEO Luke Bernstein recognized the tax incentives and permitting improvements in the governor’s plan as positive steps to attract investment but warned that a carbon tax would be counterproductive – driving up costs, eliminating jobs, and discouraging reliable energy production. Bernstein urged the governor to work with lawmakers to pursue a balanced, pro-growth energy strategy that meets demand while keeping Pennsylvania competitive.

PJM Agreement: Electricity Price Relief

Separately, Shapiro’s administration secured a deal with PJM Interconnection, which manages the regional power grid, to lower the maximum price electricity suppliers can charge in auctions. The cap will drop from over $500 per megawatt-day to $325, a change that is expected to save consumers $21 billion over the next two years.

However, energy leaders warn this is only a temporary solution to a deeper reliability challenge. Without long-term policies that encourage investment in new power generation, Pennsylvania risks continued supply shortages and price volatility.

What’s Next?

The PJM deal requires approval from federal regulators. Meanwhile, Shapiro’s energy plan will be debated in the legislature, where lawmakers will determine the future of permitting reforms, tax incentives, and PACER, among other initiatives the governor announced last week.

The PA Chamber supports tax and permitting improvements but continues to push for an energy strategy that avoids burdensome regulations and unnecessary costs on businesses.

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Founded in 1916, the Pennsylvania Chamber of Business and Industry is the state's largest broad-based business association, with its membership comprising businesses of all sizes and across all industry sectors. The PA Chamber is The Statewide Voice of BusinessTM.