It’s no secret that PECO bills have shot up. It’s so bad that even elected officials, while taking campaign contributions from utility companies and their lawyers, are talking about “affordability.” What is missing is an explanation of why electricity has become so expensive.
There are three main reasons. The “settlement” agreement between PECO and the Office of Consumer Advocate (OCA) — the agency supposed to represent the public — is the first. The “black box” settlement, agreed to by OCA, resulted in PECO’s windfall record profit.
“The most recent numbers for utility profits are, honestly, staggering,” said Elowyn Corby, the Mid-Atlantic Director of Vote Solar. “Exelon, PECO’s parent company, had a great rate of return, making its stockholders happy, but it came at the expense of ratepayers. Pennsylvania’s Public Utility Commission granted PECO one of the highest returns on equity in the entire country, almost 13%.”
PECO’s net income shot up 47.7% to $814 million in 2025 over the previous year, according to earnings reports announced earlier this month by Exelon.
“This is crazy,” said Mark Ellis, who spent 30 years as an executive in the utility sector and is now a senior fellow for utilities at the American Economic Liberties Project, adding that the models used by regulators and utilities to determine those rates of return push profits much higher than if those companies were operating within competitive markets, rather than as monopolies.
Three of the five PA Public Utility Commissioners, who approved PECO’s 13% rate of return that led to its record profits, were appointed by Governor Josh Shapiro. The other two were appointed by other democratic governors. The OCA never explained why it supported giving PECO the highest rate of return in the nation, nor why the company needed record profits in 2025.
The second reason rates continue to skyrocket is that demand is outpacing supply. The agency PJM, which controls the electric grid that connects northeast utilities, holds auctions to supply power. The fewer power plants, the less electricity is available, the higher the rates go. The PJM grid operators’ “very slow pace of interconnecting new generating capacity in recent years will cost consumers as much as $7 billion in the coming year, due to higher prices in PJM’s latest capacity auction,” says a report by the consultancy Grid Strategies prepared for Advanced Energy United.
Had PJM used “a faster, simpler process to connect just 15% of the proposed generation currently in its queue, it likely would have yielded more than the approximately 10 GW in accredited capacity needed” to bring auction costs in line with historical norms.
Corby agreed that “the supply and demand mismatch would not be as big a problem if we could get new supply online quickly.”
“The fastest way to do that is to go local, installing solar cells on your roof,” she said. “Until we have more generation, prices will go up.”
As a limited liability company (LLC), PJM is governed by a board of managers and a committee of voting members. Most of PJM’s members are energy businesses, utilities, corporate electricity customers, and others with an interest in the company’s operations.
The simplest way to understand this is to consider the work history of PJM Board Chair David E. Mills. Prior to joining the board in 2021, Mills worked as an energy consultant serving the power and natural gas industry.
By delaying connections, PJM drives up electricity prices and provides greater profits to the utility companies it serves.
The third reason is that new “data centers” use a tremendous amount of electricity. According to the National Electrical Manufacturers Association, electricity demand will increase by 300% for data centers alone by 2035. Data Centers provide jobs and replace the fading manufacturing and farming economies.
At least 36 states have crafted subsidies specifically for data center projects, according to Good Jobs First, a nonprofit watchdog group that tracks economic development incentives.
While the states subsidize the data center’s capital costs, consumers are forced to subsidize the data centers’ operating costs through higher electric costs.
Governor Shapiro, while remaining silent on the past rate hikes approved by his appointments to the PA PUC, is now taking some action. His administration sued PJM and entered into a settlement that limits next year’s rate hike. While he has taken no action to hold the State Consumer Advocate’s Office accountable for agreeing to the nation’s largest rate of return for a utility, he promises to continue to fight PJM. PJM and the Shapiro Administration have agreed to a path forward. To avoid further delays to the auction schedule, PJM will soon seek a FERC (Federal Energy Regulatory Commission) order by proposing a cap and floor mechanism through a filing with the Federal Energy Regulatory Commission. FERC’s new chairperson, Laura V. Swett, was appointed by President Trump to carry out the Trump agenda.
Hall Monitor will continue to cover rising utility bills and ask if the consumer advocates have any responsibility to seek public input before agreeing to double-digit rate hikes.
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