Positioning the commonwealth as a national leader in energy and data center development while keeping power reliable and affordable is a central goal in Pennsylvania Gov. Josh Shapiro’s new budget plan.

His path to get there is drawing mixed reactions, however.

Speaking to a joint session of the General Assembly in Harrisburg, Shapiro said his administration has helped shield Pennsylvanians from rate increases. He then turned to his Lightning Plan as a strategy to expand generation, modernize permitting and siting, and meet growing electricity demand from large new loads like data centers.

Other initiatives highlighted in the plan include tax incentives to attract investment in new, reliable energy sources; utility agreements to remove hidden fees that Shapiro estimates could save consumers over $500 million; and a push to extend price caps and reform the grid.

Sen. Gene Yaw, R-Williamsport, chair of the Senate Environmental Resources and Energy Committee, told The Center Square he agreed with the governor’s statement that affordability is ‘simple supply and demand.’ “When demand exceeds supply, price goes up, and that’s exactly what’s happening,” he said.

But Yaw said some of Shapiro’s proposals conflict with that logic – particularly with capping electricity rates. He argues that artificially suppressing prices sends the wrong market signals, discouraging investment and stifling new supply.

Yaw also pointed to what he described as 20 years of underinvestment in generation and transmission. Capacity remained largely flat while efficiency gains – such as better appliances and heating systems – helped keep demand manageable. Now, he said, the demand surge from EVs and data centers has created the “perfect storm.”

In addition, gas-fired plants are retiring faster than new generation is coming online, while vast numbers of renewable energy projects remain stuck in the interconnection queue and not getting built. New technologies like battery storage show promise, Yaw added, but aren’t yet developed at scale.

He stressed he doesn’t completely blame PJM. While not perfect, he said, they have done a pretty good job acting as an “air traffic controller” for the grid, directing the flow of power across the region from more than 1,400 generators.

Even so, he said there is no question we need more generation capacity – especially “dispatchable” power that’s available 24 hours a day, seven days a week, 365 days a year.

For Pennsylvania, Yaw said it would be “the greatest thing ever” to figure out how to use coal efficiently while keeping emissions down, but he believes the quickest path to added capacity is new gas-fired generation.

“Shapiro deserves real credit for prioritizing utility costs and his advocacy within PJM,” Chris D’Agostino, PA policy principal for Advanced Energy United, told The Center Square. “But as the governor also acknowledged, PJM is only part of the problem.”

D’Agostino said that even a speedy and functional PJM interconnection queue won’t deliver affordable, clean power if Pennsylvania continues to face unnecessary barriers to siting and permitting new projects.

He pointed to bipartisan tools that can be deployed now — like virtual power plants and other flexible resources that don’t go through PJM’s queue at all — to reduce costs, improve reliability and put downward pressure on bills faster.

Virtual power plants, or VPPs, he explained, can range from small pilots to large programs and are cheaper and faster to deploy than traditional power plants.

In practice, homes in communities with devices such as rooftop solar and smart thermostats installed agree to network to a third-party aggregator, who acts like an orchestra conductor and coordinates these devices, so, from the grid’s perspective, they behave like one power plant during peak demand.

Smart thermostats, for example, can be adjusted slightly — sometimes by a degree or less — to relieve grid strain, and participating customers may be paid for contributing. Legislation is required to advance VPPs though.

D’Agostino said clean-energy incentives are a positive step and there is an opportunity to expand advanced energy and solar-plus-storage, but he noted that only 5 percent of municipalities in Pennsylvania have ordinances that support utility-scale solar.

“If Pennsylvania is serious about solving the energy affordability crisis and staying economically competitive, we agree with the Governor on the need to pair PJM reform with aggressive action at the state level,” he said.