PECO has filed for another rate increase. This time, it’s for 12.% more after rate increases of 20% over the last two years. The filing was two weeks after PECO’s agreement not to seek higher rates expired. In its media statements, PECO said it needed the increase to upgrade its infrastructure. In PECO’s filing it said it needs the rate increase because its profits are inadequate “by any reasonable standard and far less than required to provide the company [PECO] reasonable opportunity to attract capital.”
As reported by WHYY’s Susan Phillips — one of the last remaining formidable reporters in the Delaware Valley — PECO’s chief financial officer Jeanne Jones said financial performance in 2025 “exceeded expectations, with full-year adjusted operating earnings of $2.77 per share, sustaining a 100% track record of annual outperformance.”
“With a $41.3 billion four-year capital plan and 7.9% rate base growth, we are well-positioned to deliver annualized earnings growth near the top end of 5% to 7% through 2029,” Jones added.
PECO’s corporate owner, Excelon, saw its stock shoot up 5.5% the next day.
Ms. Jones confirmed to Hall Monitor that PECO’s profits had increased by 48% last year.
Regarding PECO’s testimony that it needs a 12% rate hike this year to entice investors, Ms. Phillips reported that during a Pennsylvania House hearing, utility expert Mark Ellis testified that PECO was “on average” receiving a 12.8% “return on equity.” That’s more than twice what PECO’s employee said was needed.
For the average person, PECO’s bill has gone up more than the rate increase granted by the PUC. On top of the last rate hike approved in a “black box settlement” by the State Consumer Advocate, the cost of generating electricity shot up by 20%, mostly because Data Centers are buying so much electricity. If PECO is granted this rate increase, bills will rise by more than 12%, as PECO has announced it will serve data centers that consume large amounts of electricity. Without adding new generation from power plants or rooftop solar panels, any large increase in electricity demand will drive up prices. Power generation makes up 45% percent of the bill.
In his annual budget address, Governor Josh Shapiro said, there needs to be “a hard conversation about the amount of profit utilities and their investors can make on the backs of hardworking Pennsylvanians.”
“S&P Global Ratings currently ranks Pennsylvania as one of the top four states in the country for utilities to make a profit,” he continued. Shapiro has asked lawmakers to limit the profits utilities are given by the Pennsylvania Public Utility Commission (PUC).
The Governor also wants to require data centers that have driven up the price of electricity to “commit to bringing their own power generation or pay for the new generation they need.”
Last year, as electric prices in PA and across the nation skyrocketed, the PA PUC began investigating to find a way to limit the rate pressure created by the development of large-scale data centers. While no rules have yet to be enacted, the PUC has been given recommendations by its own experts that include requiring all agreements between utilities and data centers to be approved after hearings, that data centers pay the standard rates, utilities disclose data center cost forecasts, and commit to flexible operations that can reduce costs for entire systems. None of the recommendations have been enacted.
State legislators have also been introducing bills to eliminate the tax breaks that companies like Amazon and Microsoft receive for building data centers. Some advocates believe that making it easier to activate rooftop solar cells would increase production, lowering the overall cost of generation.
There has yet to be any consensus, and no laws have been enacted or regulations put in place.
PECO did not wait for the government to act. It has entered into agreements with two data centers that it said must be kept secret because they are “proprietary.” No one knows how much additional electricity the data centers will buy (except for PECO), what the demand on the regional infrastructure will be, or what effect it will have on the price of generation.
Some of the ideas being discussed by the Governor, PUC, and legislators will keep electric rates down, make data centers pay their fair share, and limit PECO to a reasonable guaranteed profit. Because PECO filed for its rate increase now, it is unlikely any of the changes will be implemented before the hike is granted.
That is unless PECO’s rate case is postponed until after the PUC, governor, and state legislators act. As of today, no one in power has filed such a motion.
Of course, if anyone filed such a motion, they may lose campaign contributions and Phillies and Eagles tickets, which PECO passes around.
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