PECO Seeks 12.5% Rate Hike for Electricity Customers

Utility cites need for infrastructure upgrades, but critics say returns are too high

Mar. 30, 2026 at 10:51pm

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A vibrant abstract illustration composed of overlapping triangles and rectangles in shades of blue, red, and yellow, conveying the complex economic forces at play in the debate over utility rate increases.As utility costs rise, a battle over profits and affordability plays out in the debate over PECO's proposed rate hike.Philadelphia Today

PECO, the electric and gas utility serving the Philadelphia region, is seeking to raise its rates for electricity customers by 12.5%. The company says the increases are needed to fund infrastructure upgrades, but consumer advocates argue the utility's proposed returns on equity are excessive and should be lowered.

Why it matters

Utility rate hikes have a direct impact on household budgets, especially for low-income families already struggling with rising costs of living. The debate over PECO's proposed rate increase highlights the tension between a utility's need to invest in its grid and the affordability of essential services for consumers.

The details

PECO is seeking to raise its return on equity (ROE) to 10.95% as part of the rate case, but consumer advocates argue the ROE should be between 8.5% and 9.5%, or even as low as 6-7%. The utility says its ROE would dip to 5.7% by 2027 without the increase. PECO says the upgrades are needed to expand access for electric vehicles, data centers, solar, and battery storage, citing recent projects totaling over $170 million. However, critics contend the utility's profits have soared while ratepayers struggle.

  • PECO's previous rate increase of 10% for electricity and 12.5% for natural gas took effect in January 2025.
  • Another PECO distribution rate hike of 2.8% went into effect in January 2026.

The players

PECO

An investor-owned electric and gas utility serving the Philadelphia region, a subsidiary of Exelon Corporation.

Exelon Corporation

The parent company of PECO, whose CEO made over $15.6 million in 2025.

Pennsylvania Public Utility Commission

The state regulatory body that must approve any rate increases proposed by PECO.

Darryl Lawrence

Pennsylvania's Consumer Advocate, who has said PECO's proposed return on equity should be between 8.5% and 9.5%.

Marissa Gillett

Former chair of Connecticut's Public Utilities Regulatory Authority, who argues the ROE should be 6% to 7%.

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What they’re saying

“The academic literature and financial markets indicate that the return that they're currently getting authorized by state regulators is well in excess of what is required in order to attract capital.”

— Marissa Gillett, Senior fellow at the American Economic Liberties Project

“The ROEs would dip to a level that's unhealthy.”

— Brendon Taylor, Vice president of regulatory policy for PECO

What’s next

The Pennsylvania Public Utility Commission will review PECO's rate case and determine whether to approve the proposed 12.5% increase for electricity customers.

The takeaway

This rate hike debate highlights the ongoing tension between utilities' need to invest in infrastructure and the affordability of essential services for consumers, especially low-income households. Regulators will have to balance these competing interests as they evaluate PECO's request.