Customers of PECO could witness their electricity bills rise by as much as 12.5% next year, and natural gas bills increase by 11.4%, if a proposed rate hike submitted to the Pennsylvania Public Utility Commission (PUC) is approved. The company says the increases are necessary to fund long-term investments in infrastructure, aiming to improve reliability and prepare for increasingly severe weather events. Understanding these proposed PECO rate increases is crucial for households and businesses across southeastern Pennsylvania.
The proposed changes, announced Monday, would translate to an approximate $20.08 increase per month for the average residential electric customer and a $14.52 increase for the average residential natural gas customer, according to PECO’s filing with the PUC. If approved, these new rates would take effect on January 1, 2027. PECO officials maintain that the impact could be partially offset by proposed cost-recovery mechanisms, potentially reducing bills by $2.30 per month starting in April 2027.
“We understand that any increase in costs is difficult for families and businesses, and we don’t take this request lightly,” said David Vahos, PECO president and CEO, in a prepared statement. “Our customers deserve a system they can count on – especially as severe weather grows more frequent. These investments will strengthen the grid, reduce outages, and ensure we’re delivering the safe, reliable service our customers expect every day.” The company likewise emphasized its commitment to expanding support programs for customers facing financial hardship.
Investing in Infrastructure: What PECO Cites as Justification
PECO is requesting to recover an additional $429 million for electric investments and $81 million for natural gas investments. The company details a series of ongoing and planned projects designed to modernize its systems. These include upgrades to substations, replacement of aging infrastructure, and expansion of natural gas service to new areas. According to PECO, these investments are vital to maintaining and enhancing the safety and reliability of its systems, and to meeting the growing energy demands of the region.
Recent projects highlighted by PECO include a $66 million upgrade to electric infrastructure in Upper Darby, Pennsylvania, serving approximately 7,690 customers in Delaware County. In Philadelphia, a $56 million investment in a new substation in the Overbrook section is intended to improve service for around 17,200 customers in Philadelphia and Montgomery Counties. Further, a $52 million project in Center City Philadelphia retired older substations, modernizing the system for roughly 2,900 customers. On the natural gas side, a new reliability station in Marple Township, Delaware County, and the ongoing Natural Gas Neighborhood Pilot Program – which has expanded service to over 2,000 new customers through more than 260 projects – are cited as examples of ongoing improvements.
Balancing Costs and Reliability: PECO’s Proposed Rate Tools
Acknowledging concerns about affordability, PECO is proposing two “cost-recovery rate tools” designed to spread certain costs over time. The company claims these mechanisms could deliver nearly $300 million in customer savings over six years, including $88 million in 2027. Vahos stated, “We recognize that energy costs are a concern, which is why we need to strike a balance in ensuring reliable service, while keeping costs as low as possible.” Details of these specific tools were not immediately available beyond PECO’s general description.
The proposed rate hike isn’t simply about increasing revenue, according to PECO. The company states the funding will also support expanded customer support programs and initiatives to promote cleaner energy options. This includes assistance for customers struggling to pay their bills and programs designed to help customers adopt more energy-efficient technologies.
What Happens Next? The PUC Review Process
The Pennsylvania Public Utility Commission (PUC) will now review PECO’s proposal. The PUC is responsible for ensuring that utility rates are just and reasonable. The review process typically involves a detailed examination of the company’s financial records, investment plans, and the potential impact on customers. The PUC will hold hearings and accept public comments before making a final decision.
Customers can learn more about the proposed rate hike and submit comments through PECO’s website at peco.com/Rates or by calling 1-800-494-4000. The PUC also maintains a website with information on utility rate cases and how to participate in the review process. The PUC’s website can be found at puc.pa.gov.
A final decision on the proposed rate hike is expected before the conclude of 2026, allowing PECO to implement any approved changes on January 1, 2027. The PUC will announce a schedule for public hearings and comment periods in the coming weeks. Customers concerned about the potential impact of the rate increase are encouraged to participate in the PUC’s review process and make their voices heard.
This proposed rate increase comes as energy costs remain a significant concern for many households. The PUC’s decision will have a direct impact on the affordability of electricity and natural gas for PECO’s 1.6 million electric and 500,000 natural gas customers in southeastern Pennsylvania. The commission’s upcoming review will be closely watched by consumer advocates and energy stakeholders alike.
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