PECO, the Exelon-owned utility serving southeastern Pennsylvania, has formally requested state regulators to approve substantial delivery rate increases that would take effect in 2027. The proposal would increase the average residential electricity bill by 12.5%, approximately $20.08 monthly, while suburban natural gas customers would see an 11.4% increase, adding about $14.52 to their monthly expenses.
The filing comes as regulators across the Mid-Atlantic region face mounting pressure to determine which infrastructure costs—including storm hardening, pipeline modernization, and upgrades to support electric vehicles and data centers—should be passed through to consumers. This regulatory environment is becoming increasingly complex as utilities nationwide seek to modernize aging grids while managing affordability concerns.
PECO is seeking $429 million for electric system enhancements and an additional $81 million for natural gas infrastructure improvements. The utility serves approximately 1.7 million electric customers across southeastern Pennsylvania and over 553,000 gas accounts in Philadelphia's suburbs. The company has outlined an ambitious $10 billion, five-year capital spending plan for grid and pipeline work. "Affordability remains our top priority," stated Doug Oliver, senior vice president for government, regulatory and external affairs. CEO David Vahos emphasized that customers "deserve a reliable system they can depend on."
The proposed increases specifically target delivery charges—the regulated fees covering infrastructure such as poles, wires, substations, and pipelines, separate from the actual commodity costs of electricity or natural gas purchased on wholesale markets. PECO is advocating for a forward test year methodology, which would base approved rates on projected 2027 costs rather than historical data. The company argues this approach reduces the lag between infrastructure investment and cost recovery.
This filing follows recent rate adjustments that have already impacted customers. PECO's previous rate case resulted in a 10% electric bill increase for 2025, with an additional 1.8% hike this year. Gas customers absorbed a 12.5% increase that became effective last year. Exelon's financial reports show PECO generated $814 million in net income during 2025, providing context for the current regulatory debate.
Labor negotiations add another layer of complexity to the rate proceedings. More than 1,000 members of IBEW Local 614 continue working despite their contract having expired. The union has filed unfair labor practice charges, citing unresolved issues regarding compensation, healthcare benefits, and retirement plans. PECO maintains that its proposal is equitable and has contingency plans prepared should negotiations fail.
PECO is requesting a 10.95% return on equity (ROE), representing the potential return for shareholders who finance utility assets. In supporting testimony, Ann Bulkley, a principal at The Brattle Group, argued that PECO faces "elevated risk levels compared to peer utilities," citing the substantial scale of its capital expenditure program.
Regulatory precedent suggests utilities rarely receive their full requested amounts. In Pennsylvania, rate cases typically span nine months, with final approved increases often reduced from initial proposals. Meanwhile, in Maryland, commission staff have questioned revenue projections from Pepco—another Exelon subsidiary—while the state's Office of People's Counsel has advocated for complete dismissal of Pepco's similar rate case. Virtual hearings on Pepco's proposal are scheduled for April 14 and 17, with a potential August implementation if approved.
PECO officials have pushed back against characterizing the rate request as primarily driven by artificial intelligence and data center growth. Oliver asserted the company would have filed this case regardless of projected data center loads, stating the proposal "is not exclusively about data centers." He explained that PECO's transmission security agreements are designed to prevent costs associated with specific large projects from being disproportionately borne by residential ratepayers.
The timing of this filing ensures it will receive significant scrutiny, particularly as households continue grappling with elevated energy costs following a winter of high heating bills. The Pennsylvania Public Utility Commission's decision will establish important precedents for how the state balances infrastructure investment needs against consumer affordability in the coming decade.
