Shapiro’s Energy Proposals Would Harm Pennsylvania, New Study Asserts

Energy is Pennsylvania’s competitive advantage. However, two proposed climate-related programs will harm the Keystone State economically and fail to provide any meaningful environmental benefits, according to a new study published by the Commonwealth Foundation.

Gov. Josh Shapiro developed two programs as part of his state-level equivalent of the Green New Deal: the Pennsylvania Climate Emissions Reduction Act (PACER) and the Pennsylvania Reliable Energy Sustainability Standard (PRESS). PACER is a cap-and-trade program that would impose a “de facto carbon tax.” Meanwhile, PRESS would expand the commonwealth’s Alternative Energy Portfolio Standard, increasing the amount of unreliable energy onto the grid.

The programs come with a hefty price tag. By 2035, PACER and PRESS would impose $157 billion in additional statewide electricity costs for businesses and households. Most of these costs—about $155 billion—stem from PRESS compliance.

These cost measurements include PACER’s 70 percent rebate, which Shapiro claimed would offset increased costs. Without the rebate, PACER would add another $5 billion in statewide electricity costs—still adding $2.2 billion even with the rebate.

These added costs will translate into higher utility rates. In 2023, the average electricity price was 12.58 cents per kilowatt-hour (kWh). Under PACER and PRESS, that rate will spike to 20.17 cents per kWh by 2025—a 60 percent increase.

With these rate increases, utility bills will double across the commonwealth. The report warns that, with PACER and PRESS, annual electricity costs would increase by more than $1,700 for households, $5,500 for commercial businesses, and $178,000 for industrial businesses.

What does that mean for everyday Pennsylvanians? A 102 percent increase in their household electricity bills by 2035 under PACER and PRESS.

Government mandates will drive these price hikes. PRESS would almost triple Pennsylvania’s mandated power plant capacity from about 48 gigawatts (GW) to 124 GW. The added capacity does not come from actual grid demand but rather from the need to overbuild wind and solar to compensate for their dependence on favorable weather conditions. This arbitrarily added capacity and costs would be unnecessary for reliable energy resources, such as coal, natural gas, and nuclear.

The report also contends that the Shapiro administration exaggerates the environmental benefits of PACER and PRESS.

Environmental analysts attempt to measure the “social cost of carbon” (SCC). SCC purports to represent the monetary damage to agriculture, human health, property, and other factors caused by emitting one additional ton of carbon dioxide into the atmosphere.

However, PACER and PRESS exceed the federal government’s SCC criteria from the previous administration. Emission reductions under the two programs would be at least twice as high as the SCC and climate restrictions established by former President Joe Biden. Simply put, the economic cost of reducing carbon emissions exceeds the health and environmental benefits of Shapiro’s proposed programs.

The report also highlights how Pennsylvania reduced emissions without PACER and PRESS. In fact, data from Pennsylvania’s Independent Fiscal Office shows that the commonwealth is one of only three states in the region to reduce emissions and increase power generation. The report highlights how the substantial shift from coal to natural gas spurred this unique pattern.

Rather than imposing extra regulations and mandates, Pennsylvania lawmakers must embrace market-driven solutions for the commonwealth’s energy sector that prioritize the real needs of families and businesses for reliable and affordable power.

“Pennsylvania should lead with affordability, reliability, and market-driven policies, not heavy-handed government mandates,” states André Béliveau, senior manager of energy policy at the Commonwealth Foundation and the report’s lead editor.

Energy policies possess wide-ranging ramifications, including national security, economic development, technological innovation, and public safety. Moreover, voter concerns about skyrocketing electricity bills and energy affordability played an outsized role in the 2024 national election.

Pennsylvania remains, according to the report, “a pillar of American energy leadership.” Considering Pennsylvania’s prominent national status as a power-producing state, policymakers must carefully consider the unforeseen consequences of misguided policies.

The full report, authored by Issac Orr and Mitch Rolling from Always On Energy Research, is available on the Commonwealth Foundation’s website.