Peco proposes a rate increase that could raise average monthly electric and gas bills by next year.

PECO Energy Company has initiated a request for a substantial rate increase, citing the pressing need for major upgrades to enhance grid reliability and meet the growing demand for electricity and natural gas. On Monday, the utility submitted its formal request to the Pennsylvania Public Utility Commission (PUC), seeking a combined increase of 0 million in rates for both electric and natural gas delivery, set to take effect in 2027.

The Philadelphia-based utility, which provides service to approximately 1.7 million electric customers and more than 550,000 natural gas customers across Southeastern Pennsylvania, has outlined that a typical residential electric bill could rise by .08 per month, representing a 12.5% increase. Under a proposed plan to stagger the increase over time, this figure could be reduced by approximately .30 monthly. For residential natural gas customers, the expected increase is about .52 per month, or 11.4%. It is important to note that most natural gas customers in Philadelphia rely on Philadelphia Gas Works (PGW) for their supply.

The proposed increase comes in two segments: 9 million to fund electric infrastructure upgrades and million allocated for natural gas investment projects. In total, PECO has earmarked approximately billion for infrastructure improvements over the next five years, which the company asserts are necessary to create a more reliable energy grid tailored to customer needs.

This announcement arrives amid negotiations between PECO and the International Brotherhood of Electrical Workers (IBEW) Local 614, representing around 1,600 company employees, including linemen and customer service representatives. The existing labor agreement expires shortly, adding another layer of urgency to the situation.

PECO’s request is noteworthy, especially given the current economic climate, in which many consumers are already struggling with rising utility costs. Doug Oliver, senior vice president at PECO, acknowledged the difficulty of pursuing a rate hike in an environment where affordability is a significant concern. He emphasized the company’s investment strategy aims to assure customers of reliable service while grappling with the increased demand fueled by factors such as extreme weather and escalating operational costs.

To manage reliability issues more effectively, PECO is planning to replace outdated infrastructure with enhanced materials, invest in modern inspection technologies, and undertake various initiatives aimed at expanding its renewable energy capabilities and adopting electric vehicle charging technology. Additionally, the company is implementing a customer relief program designed to assist those in financial need by capping utility bills at a percentage of household income.

PECO’s last rate adjustment request pertained to electricity and gas rates in 2024, with increments approved by the PUC for the subsequent years. The utility is operating under a PUC agreement that restricts it from filing another request until 2026, underscoring the pressure to adhere to regulatory frameworks while addressing infrastructure challenges.

As the public awaits the PUC’s decision, the implications for residential customers and the overall stability of the energy grid in the Philadelphia region remain a pivotal focus for all stakeholders involved.

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