PECO's Rate Hike Demand: Record Profits, Political Fury, and What Philadelphia Families Will Pay
PECO Energy wants more of your money — again. The Philadelphia-area utility has filed for a 12.5% increase in residential electric rates and 11.4% increase in natural gas rates, a combined ask that would extract an additional $429 million from ratepayers annually. If the Pennsylvania Public Utility Commission approves the request, the new rates would take effect January 1, 2027.
The timing is brazen. PECO just reported $814 million in net profit for 2025 — a nearly 50% jump from $551 million in 2024 — after already receiving a 10% electricity rate hike and a 12.5% natural gas rate increase in January 2025. This is also the company's third rate hike request since 2022. Governor Josh Shapiro didn't mince words when he called the proposal "pure greed" on April 8, 2026, pledging to do everything in his power to stop it. A day later, Bucks County legislators followed with a formal letter urging PECO to withdraw the request entirely.
This is not a routine regulatory filing. It's become a flashpoint for a deeper national conversation about monopoly utility pricing, executive compensation, and who bears the burden when energy companies post record profits while household budgets are squeezed. Here's a breakdown of exactly how much more you'd pay — and why the political backlash this time feels different.
The Numbers: What PECO Is Asking For
The proposed increases aren't abstract percentages. They translate directly into household budget hits:
- Electricity: Average residential electric bills would rise by $241 per year — about $20.08 more every month.
- Natural gas: Average gas bills would climb $174 annually — $14.52 more each month.
- Combined hit for dual-fuel customers: Roughly $415 more per year, or about $34.58 per month.
For households already navigating elevated grocery costs, elevated insurance premiums, and gas prices that have surged past $4 in some regions, that's a meaningful hit. For fixed-income residents, seniors, and working families, it's a more serious problem.
PECO serves approximately 1.6 million electric customers and 530,000 natural gas customers across the Philadelphia region and surrounding counties — meaning millions of people would feel this increase simultaneously.
The Profit Problem: $814 Million in 2025
The central tension in this rate case is unavoidable: PECO is seeking a major rate increase immediately after posting its most profitable year on record.
PECO's 2025 net profit of $814 million represents a 47.7% increase over its 2024 profit of $551 million. That profit surge came in the same year the company was granted a 10% electricity rate hike and a 12.5% natural gas rate increase — increases that were, presumably, justified at the time based on anticipated costs and infrastructure needs.
PECO's parent company is Exelon, one of the largest utility holding companies in the United States. Exelon CEO Calvin Butler earned more than $15.6 million in compensation in 2025. That figure has attracted particular scrutiny from critics who argue the company is managing its capital allocation for shareholder and executive benefit, then turning to regulators to approve higher consumer rates.
The return on equity PECO is requesting — 10.95% — is significantly above the national average for utilities, according to a senior fellow at the American Economic Liberties Project. Return on equity is essentially the profit rate a company is allowed to earn on its investments; regulators typically set a cap as part of the rate-setting process. Requesting an above-average ROE while reporting near-record profits makes the optics considerably worse for PECO's case.
"Pure greed." — Pennsylvania Governor Josh Shapiro, describing PECO's rate hike request on April 8, 2026
The Political Backlash: Shapiro, Bucks County, and Why It's Escalating
Governor Shapiro's public statement wasn't diplomatic. He called PECO's proposal "pure greed" and vowed to fight it, which is a notably aggressive posture from a governor toward a regulated utility. Governors don't control the PUC — it's an independent regulatory body — but they can appoint commissioners, apply public pressure, direct the Office of Consumer Advocate to intervene aggressively in the rate case, and shape legislative responses.
Shapiro's intervention matters because it signals that this rate case will face organized, high-profile opposition rather than the usual low-visibility regulatory process. Most rate cases unfold largely out of public view. This one is different.
On April 9, 2026, Bucks County legislators sent a formal letter to PECO urging the company to withdraw its request entirely. Bucks County is one of PECO's largest service territories outside Philadelphia proper — it's densely suburban, with a large share of middle-income households that would feel the increase directly. The legislators cited the financial strain already facing residents and pointed to PECO's profit record as evidence that the hike isn't necessary.
This kind of bipartisan, multi-level political pressure is meaningful. The PUC makes the final call, but commissioners are not immune to political context. The Office of Consumer Advocate, which represents ratepayers in PUC proceedings, will likely mount a vigorous challenge. PECO will need to make a strong evidentiary case for its cost structure, capital needs, and proposed ROE — and it will be doing so in a very unfriendly political environment.
A Pattern of Hikes: PECO's Rate History Since 2015
This isn't an isolated event. PECO has sought and received rate increases four times between 2015 and 2025, and has now filed for its third hike since 2022 alone. That pattern reveals something important about how monopoly utilities operate: because they face no market competition, the regulatory process is the only constraint on their pricing power.
The rate case cycle typically works like this: a utility files for an increase based on projected costs, capital expenditures, and its authorized rate of return. The PUC reviews the filing, holds hearings, allows intervenors (including the Consumer Advocate) to challenge the numbers, and eventually issues a decision — often granting a portion of what was requested. The utility then operates under those rates until it files again.
PECO's filing history suggests it has used this cycle aggressively. Each approved increase becomes the new baseline from which the next ask is calculated. A 10% increase in 2025 followed by a 12.5% electric increase for 2027 is a compounding problem for consumers, not just an additive one.
The broader context matters here too. Energy costs are already a significant pressure point for American households. As financial trends in April 2026 show increased focus on household cost pressures, utility bills are a recurring flashpoint that affects millions of people who have no ability to shop around for a different provider.
What the PUC Process Looks Like From Here
The Pennsylvania Public Utility Commission is the decision-maker, and its process is structured — not a simple up-or-down vote. Here's what happens next:
- Formal filing and docketing: PECO has filed its rate case. The PUC formally accepts and dockets it, triggering the regulatory process.
- Intervenor participation: The Office of Consumer Advocate, the Office of Small Business Advocate, industrial customers, and other parties can formally intervene and file their own evidence and testimony.
- Discovery and hearings: PECO must open its books. Intervenors can challenge its cost assumptions, capital expenditure projections, and proposed rate of return.
- Administrative Law Judge recommendation: An ALJ reviews the record and issues a recommended decision.
- PUC commissioner vote: The full commission votes on the final outcome, which may approve, reject, or modify the proposed rates.
The PUC is expected to make its decision in the second half of 2026. Historically, utilities rarely receive everything they ask for — but they rarely receive nothing either. The question is how much the commission trims from PECO's request, and whether the political pressure translates into a more aggressive reduction than usual.
What This Means for Philadelphia-Area Ratepayers
For households in PECO's service territory, there are practical steps worth considering now, regardless of how the PUC rules:
- Participate in the public comment process. The PUC accepts public comments on rate cases. Individual ratepayers submitting comments creates a record that commissioners must acknowledge.
- Audit your energy usage. PECO and Pennsylvania's efficiency programs offer free energy audits. Reducing consumption before rates rise is the only direct hedge consumers have. Consider investing in a smart thermostat or home energy monitor to track and reduce your usage.
- Check eligibility for LIHEAP and CAP. Pennsylvania's Low Income Home Energy Assistance Program and PECO's own Customer Assistance Program offer bill reduction for qualifying households. Income thresholds are higher than many people assume.
- Contact your state legislators. PUC commissioners are appointed by the governor with Senate confirmation. Legislative pressure on both the commission and the governor's office is one of the few levers consumers have.
If the hike is approved and you're looking to meaningfully reduce energy costs at home, efficiency upgrades can make a real difference. Products like LED bulb packs, weatherstripping and door seals, and smart power strips that eliminate phantom loads are low-cost ways to trim consumption before higher rates arrive.
Analysis: The Monopoly Utility Problem Isn't Going Away
PECO's rate hike request is a local story with national implications. It illustrates a structural problem with how regulated monopoly utilities operate in America: they have no competition, guaranteed customer bases, and a regulatory process that's technically open to the public but practically dominated by lawyers, engineers, and accountants. The result is a system where utilities have every incentive to file large rate cases and little incentive to restrain costs.
The "pure greed" framing from Governor Shapiro is politically effective but analytically incomplete. PECO does have real infrastructure costs — grid modernization, reliability investments, and compliance obligations are legitimate expenses. The question isn't whether utilities should earn a return on capital; it's whether a 47.7% jump in annual profit followed immediately by another major rate request reflects a company operating in consumers' interests or managing its regulatory relationships for maximum extraction.
The proposed 10.95% return on equity is particularly telling. Regulators set ROE caps specifically to prevent monopoly rent extraction. When a utility seeks an above-average ROE in a year of record profits, it's a signal that the regulatory process — not the market — is the last line of defense for consumers. And that process depends entirely on well-resourced intervenors, engaged commissioners, and political accountability.
This case will be worth watching as a bellwether. If the PUC grants a large portion of PECO's request despite the political backlash, it will signal that regulatory capture is functioning effectively and consumers have limited recourse. If the commission makes meaningful cuts, it may reflect genuine responsiveness to the public record built by intervenors and the political environment shaped by Shapiro's intervention.
Frequently Asked Questions
When would the PECO rate hike take effect?
If approved by the Pennsylvania Public Utility Commission, the new rates would take effect January 1, 2027. The PUC is expected to issue its decision in the second half of 2026, giving some time between the ruling and implementation.
Can PECO raise rates without PUC approval?
No. PECO is a regulated monopoly utility, which means it cannot change base rates without going through the PUC rate case process. The commission reviews the utility's cost structure, capital needs, and proposed return on equity before approving any changes. This is why intervenors, public comments, and political pressure on the PUC matter — the commission has genuine discretion in how much of a proposed increase to approve.
Why is PECO's profit record relevant to the rate case?
Under the regulated utility model, rates are supposed to allow a utility to recover its costs and earn a reasonable return — not maximize profit indefinitely. When a utility reports record profits immediately after a rate increase, it raises legitimate questions about whether the prior increase was set appropriately and whether another increase is genuinely necessary. Intervenors will use PECO's $814 million profit figure as evidence that the company's current rates are already generating an excess return, and that another increase is unjustified. Full details on the rate filing are here.
What can individual PECO customers do to oppose the rate hike?
Customers can submit formal public comments to the PUC during the rate case process — the commission is required to consider public input. You can also contact your state legislators (both house and senate members) and urge them to pressure the PUC. Organizations like the Pennsylvania Office of Consumer Advocate are already intervenors in the proceeding, and supporting their work through public awareness helps build the record. If you're facing financial hardship, contact PECO directly about Customer Assistance Program eligibility regardless of the rate case outcome.
Has the PUC ever rejected a PECO rate hike entirely?
Full rejection of utility rate cases is rare in Pennsylvania and nationally. More commonly, the PUC approves a portion of the requested increase after reviewing the utility's evidence and intervenor challenges. PECO has successfully obtained rate increases four times between 2015 and 2025. The size of the reduction — if any — in the current case will depend heavily on the strength of the intervenor record and the commission's posture, both of which may be influenced by the current political environment.
The Bottom Line
PECO's request for a 12.5% electric and 11.4% gas rate hike, filed after a year of record $814 million profits, has ignited legitimate public fury. Governor Shapiro's "pure greed" characterization may be blunt, but the underlying numbers support the outrage: ratepayers were already hit with a 10% electric and 12.5% gas increase in January 2025, and PECO responded to that revenue windfall by immediately filing for more.
The PUC process is the right venue for this fight, and it's a process that intervenors, consumer advocates, and an engaged public can influence. Whether the commission proves responsive to that pressure — or whether PECO's regulatory relationships produce another favorable outcome despite record profits and political opposition — will tell ratepayers a great deal about how much protection they actually have from their utility monopoly.
For now, the battle lines are drawn. The decision arrives in the second half of 2026. Philadelphia-area households should be paying attention.
