Source: Jakec, Wikimedia Commons
In Harrisburg, state legislators have shown that elections do matter. There is now a bill that, if the Republican-controlled PA Senate passes it and Governor Shapiro signs it into law, will provide some relief from rising utility rates.
The bill’s lead sponsors, Democratic State Reps. Elizabeth Fiedler and Danilo Burgos, represent different parts of Philadelphia. HB 4222, if enacted, will place a limit on PECO’s profits and cut a significant portion of our electric bills. The cost of generating electricity is not affected by the bill.
Perhaps nothing is more telling than the PA House vote: it was 202–0. Not a single corporate Democrat or Republican voted against the bill. Without State Rep. Chris Rabb’s win and the polls showing Republicans in danger of losing control of government, it is unlikely this bill would have passed.
Because electric bills are separated into the generation of electricity — which is deregulated in PA — and the transmission and distribution of that generated electricity — which remain regulated — it is hard to understand what Bill 4222 does and what it doesn’t do.
By law, Private, stockholder-owned utilities are given two things: a territory where no other utility can offer service, and a guaranteed profit. The territories were created to save money and to simplify the electrification of America. With a company given a territory, there would be only one set of wires reaching each home, bringing electricity into a region. If there were two or more companies in the same territory, there would be two sets of wires, doubling costs and creating wire problems.
The reason for the guaranteed profit was to help stockholder-owned utilities attract investors. The argument was that investors would not buy shares or lend money to utilities unless the utilities were guaranteed a profit.
In the bad old days, the profit, often called “the rate of return,” was tied to the price an investor could make buying government bonds.
During the recent deregulation era led by both corporate-controlled Democrats and Republicans, lobbyists successfully separated the profit from the price of bonds. While bonds paid lower and lower interest, stockholders who owned utilities raised rates year after year. On average, the utility rate of return is now twice the interest paid on treasury bonds.
Over the last six years, electric bills in PA have increased by 60%.
In 2025, PECO’s net profit increased by over 47%.
The bill would once again tie PECO’s profits and those of other utilities in PA to the interest on bonds. The company’s profit would be limited to 2% above the yield (the interest the bond pays) on a United States Treasury Bond.
The limit on future PECO rate increases can take effect only if the State Senate calls the bill up for a vote and passes it. Much like increases to the minimum wage, there may be widespread support for a bill limiting future rate increases, but the Republican leadership can refuse to schedule a vote.
No matter who the Republican leadership serves, utility monopolies or consumers, rising electric rates are still in the foreseeable future.
The other part of the electric bill — the generation of electricity — is not regulated, but is largely controlled by a little-understood entity called PJM. PJM interconnects utilities and electric brokers on the East Coast with consumers. Bill 4222 will not keep generation rates down.
Study after study has shown that the promises made to secure support for deregulating electricity have not been kept. Rather than lower rates, deregulation has led to rate hikes and power shortages. The last study done found: “The process which sets the default supply rate is also not very competitive. Less competition means the middleman companies bidding in those auctions can bid, and win, higher prices — raising electric bills and increasing their profit margin… Energy deregulation promised lower prices through competition. But instead, consumers got an army of middleman marketers. And, those middlemen have been taking their cues from a bidding process that often has too few participants to keep prices low.”
PJM, which decides how generators connect to the grid to sell electricity, is controlled by its board. The board is elected by PJM members. Over 90 % of PJM members are utilities or energy suppliers. Almost all of them benefit from higher electric rates.
It is no surprise that electricity generators have decided not to build new plants, and to make it difficult for solar and other generators to connect to the grid. The companies in PA and across the country have created a shortage by limiting generation, leading to higher rates and “brownouts.” This will not change until our economic model, which favors deregulation of the basic necessities of life, changes.
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