What You’ll Learn
- Why PECO electricity rates have increased significantly in 2025 and 2026
- What the PJM capacity market is and how it drives your bill
- How much the average PECO residential customer is paying per month
- What options exist to reduce or stabilize your electricity costs
Introduction
If you are a PECO customer in southeastern Pennsylvania, you have already noticed the impact on your monthly bill. Between distribution rate increases, generation supply adjustments, and surging capacity costs, PECO residential electricity rates have climbed substantially over the past two years.
This is not a temporary spike. The underlying forces driving these increases: aging infrastructure, data center expansion, and structural changes in how wholesale electricity is priced, are expected to persist. For homeowners in the PECO service territory, understanding exactly what is driving your bill higher is the first step toward making informed decisions about your energy future.
This guide breaks down the components of your PECO bill, explains why costs are rising, and outlines the options available to reduce your exposure to continued rate volatility.
What PECO Customers Are Paying in 2026
As of early 2026, the average total electricity rate for PECO residential customers, including supply, distribution, transmission, and all riders — is approximately 20 cents per kWh. That is up over 20 percent from early 2025 levels, when the all-in rate was closer to 16 cents.
For a household using 750 to 1,000 kWh per month, total monthly electricity costs now range from roughly $150 to $200 or more. That represents $30 to $50 per month more than the same household was paying at the start of 2025. An increase of $360 to $600 per year for the same amount of electricity.
And the increases are not over. PECO has indicated that additional capacity cost phase-ins will continue to affect bills through December 2026, meaning residential customers should expect further adjustments in the months ahead.
Why PECO Rates Are Rising: The PJM Capacity Market
To understand why your PECO bill has increased, you need to understand how electricity pricing works in Pennsylvania. PECO does not generate electricity. It purchases power through PJM Interconnection, the regional grid operator that manages electricity supply across Pennsylvania and 12 other Mid-Atlantic and Midwestern states.
PJM runs annual capacity auctions where power generators bid to guarantee they can produce enough electricity to meet peak demand during the hottest and coldest days of the year. The fees from these auctions are passed directly to consumers through their utility bills.
What Changed in the 2025-2026 Capacity Auction
The most recent PJM capacity auction produced a dramatic cost increase. Capacity prices surged by over 800 percent compared to the prior auction period. Several factors converged to create this outcome: rapid growth in electricity demand from data centers, vehicle electrification, and manufacturing expansion across the PJM region; retirement of older coal-fired power plants without sufficient replacement generation coming online; new reliability accreditation rules that reduced the amount of capacity counted as available during extreme weather; and delays in connecting new generation sources, including renewable energy projects, to the grid.
The result was a wholesale capacity cost that PECO is required to pass through to customers. Because PECO phases these costs in over multiple billing periods, customers have seen increases in June 2025, December 2025, and will see additional adjustments in June and December 2026.
Breaking Down Your PECO Bill
Your PECO electricity bill has two main components, and understanding the distinction matters because they are affected by different forces.
Distribution Charges
These are the fixed-rate charges for delivering electricity to your home through PECO’s local infrastructure. Distribution rates are set by the Pennsylvania Public Utility Commission (PUC) and cover maintenance, upgrades, and operating costs for PECO’s local grid.
In late 2024, the PUC approved a distribution rate increase of approximately 10 percent for PECO — the first major distribution increase in over a decade. This increase took effect at the beginning of 2025.
Supply Charges (Generation)
These charges represent the actual cost of the electricity you consume. For customers on PECO’s default service, the supply rate is the Price to Compare (PTC), which changes quarterly based on the results of PECO’s procurement auctions. The PTC includes both generation supply costs and transmission charges.
The PTC is the portion of your bill most affected by the PJM capacity market. It is also the portion you have the ability to change, either by switching to a competitive electricity supplier through Pennsylvania’s Energy Choice program, or by generating your own electricity with solar.
How PECO Rates Compare Across the Region
PECO’s rate increases are not happening in isolation. The PJM capacity cost surge affects every utility in the region. Customers served by PPL Electric, Met-Ed, Penelec, and West Penn Power in Pennsylvania are experiencing similar increases. In New Jersey, PSE&G, JCP&L, and Atlantic City Electric customers saw even steeper increases, with some facing 17-20 percent bill hikes.
However, southeastern Pennsylvania faces a particular concentration of cost pressure. The PECO service territory, covering approximately 1.7 million customers across the Philadelphia metro area and portions of York County, sits in one of the most congested parts of the PJM grid, where transmission constraints can amplify price signals.
What PECO’s Rate Increases Mean for Businesses
The residential numbers above are only part of the story. PECO’s commercial customers are absorbing steeper supply increases, and they carry a cost that residential customers never see.
When PECO’s default supply rates reset on June 1, 2026, residential customers saw their Price to Compare rise roughly 5 percent. Small business generation charges jumped about 15 percent over the same reset, climbing from 9.35 cents to 10.728 cents per kWh. Same grid, same PJM capacity pressure, a noticeably harder hit on the business side. That rate holds through November 30, 2026, with the next adjustment due December 1.
Why Commercial Bills Climb Faster
A residential bill has two moving parts: supply and delivery. A commercial bill usually has three. On top of supply (generation) and delivery (distribution and transmission), most commercial rate classes pay demand charges, billed on the highest rate of electricity your business draws during the billing period, measured in kilowatts over a short interval.
Demand charges exist because the grid has to be built to serve your peak, not your average. A facility that briefly spikes when compressors kick on, ovens fire at open, or machinery cycles at shift change pays for that peak across the entire month. For many commercial accounts, demand charges run 30 to 70 percent of the total bill before a single kilowatt-hour of energy is counted.
The PJM capacity surge driving residential rates flows into the commercial side too, and it lands on top of those demand charges rather than instead of them. That is why a 15 percent generation increase can hit a business harder than the number suggests once it compounds across the full bill.
What Businesses Can Do That Homeowners Cannot
Shopping a competitive supplier through PAPowerSwitch helps with the supply layer, the same as it does for residential. It does nothing for delivery or demand charges, which for many businesses are the larger problem.
On-site solar is the one lever that reaches more than the supply line. Energy produced on your roof is energy you do not buy from anyone, at a cost fixed on the day the system is installed. For facilities with meaningful daytime load, solar can also flatten the consumption peaks that drive demand charges, reducing the part of the bill no supplier contract touches.
There is also a timing advantage that favors businesses specifically in 2026. The federal residential solar tax credit expired at the end of 2025. The commercial credit did not. The Section 48E Investment Tax Credit remains available at 30 percent for commercial systems that begin construction by July 4, 2026, and it stacks with MACRS accelerated depreciation. For a PECO-territory business weighing solar, that window separates this year from every year after.
See What Your PECO Business Bill Is Actually Made Of
Send us one recent PECO business bill. We will return a line-by-line breakdown showing how much you are paying in supply, delivery, and demand charges, and what portion of it on-site solar could remove. No obligation, and the analysis is yours to keep.
What Options Do PECO Customers Have?
Pennsylvania’s deregulated electricity market means you are not locked into PECO’s default supply rate. There are several paths to reducing or stabilizing your electricity costs.
Shop for a Competitive Supplier
Through Pennsylvania’s Energy Choice program (PAPowerSwitch.com), residential customers can compare offers from licensed competitive electricity suppliers. Fixed-rate plans allow you to lock in a supply rate for a set term, protecting against future PTC increases.
The trade-off: competitive supplier plans may include early termination fees, and a fixed rate that seems attractive today could become less competitive if wholesale prices happen to drop. You are essentially betting on the direction of rates.
Reduce Consumption
Energy efficiency measures, LED lighting, smart thermostats, improved insulation, high-efficiency HVAC systems, reduce the number of kilowatt-hours you consume, which lowers your bill regardless of the rate. These are worthwhile investments, but they address volume, not price per unit.
Generate Your Own Electricity with Solar
Solar panels allow homeowners to produce their own electricity, reducing or eliminating their dependence on PECO’s supply charges. Unlike switching suppliers or reducing consumption, solar fundamentally changes the equation: instead of paying a fluctuating rate for electricity delivered from the grid, you are generating power at a fixed cost determined by the price of your system.
For a typical residential solar installation in southeastern Pennsylvania, the cost per kilowatt-hour of solar electricity over the system’s 25-year lifespan is significantly lower than current PECO rates, and that cost is locked in on the day your system is installed. It does not increase with PJM auction results, distribution rate cases, or data center demand.
Combined with Pennsylvania’s net metering program, which credits solar homeowners at the full retail rate for excess energy sent to the grid, and the state’s SREC program, which provides additional income for solar energy production, the financial case for solar in the PECO territory has become more compelling with every rate increase.
Are PECO Rates Going to Keep Rising?
The structural factors driving rate increases, data center growth, grid infrastructure aging, power plant retirements, and slow interconnection of new generation, are not short-term disruptions. Industry analysts and PJM itself have acknowledged that demand growth is outpacing supply additions.
In July 2025, the PJM capacity auction for the 2026-2027 delivery year hit its price cap at $329.17 per megawatt-day, indicating continued supply tightness. A bipartisan coalition of nine governors, including Pennsylvania’s, has called on PJM to improve transparency and expedite new generation interconnection, but these are structural changes that take years to implement.
For PECO customers, the practical implication is straightforward: planning around continued rate increases is more prudent than hoping for rate relief.
How Sunwise Can Help
Sunwise Energy works with homeowners across the PECO service territory to design solar systems that are sized to offset real electricity usage, not generic estimates. Our team understands PECO’s rate structure, Pennsylvania’s net metering rules, and the SREC program, and we build that knowledge into every system proposal.
If rising electricity costs have you evaluating your options, a conversation with our team can give you a clear picture of what solar would look like for your specific home, usage, and financial goals.
PECO Rate FAQs
How much has PECO increased rates in the past two years?
Between distribution and supply charge increases, PECO’s average total rate has risen to approximately 20 cents per kWh — an increase of over 20 percent since early 2025. For most households, that translates to $30 to $50 more per month depending on usage. Additional capacity cost phase-ins are expected through the end of 2026.nd of 2026.
What is the PECO Price to Compare?
The Price to Compare (PTC) is the default rate PECO charges for the electricity supply portion of your bill. It includes generation and transmission costs and changes quarterly. The PTC does not include distribution charges, riders, or other fees — which is why the total rate you pay per kWh (currently around 20 cents) is higher than the PTC alone.
Can I switch electricity suppliers in Pennsylvania?
Yes. Pennsylvania’s Energy Choice program allows residential customers to choose a competitive electricity supplier for the supply portion of their bill. You can compare offers at PAPowerSwitch.com. Distribution charges remain with PECO regardless of your supplier choice.
Will solar panels eliminate my PECO bill entirely?
A properly sized solar system can offset most or all of the supply charges on your PECO bill. You will typically still see a small monthly service fee for grid connection, but the generation charges — the portion that has been increasing — can be dramatically reduced or eliminated through solar production and net metering credits.
How much are PECO business electricity rates increasing in 2026?
As of the June 1, 2026 supply reset, PECO’s small business generation charge rose roughly 15 percent, from 9.35 to 10.728 cents per kWh. That is a steeper jump than the roughly 5 percent increase to the residential Price to Compare over the same reset. Commercial customers also pay demand charges based on peak usage, which residential customers do not, so the total impact on a business bill is typically larger than the generation increase alone suggests. The new commercial baseline runs through November 30, 2026.
Can solar reduce commercial demand charges?
Potentially, yes. Demand charges are billed on your facility’s peak rate of electricity draw, not just total consumption. For businesses with significant daytime load, on-site solar can reduce the amount of grid power pulled during those peak periods, which can lower demand charges on top of cutting supply charges. The effect depends on your load profile and when your peaks occur, which a commercial assessment evaluates.
The information in this guide is for informational and educational purposes only and does not constitute legal, financial, or tax advice. We are not licensed tax advisors or financial professionals. The tax laws and regulations discussed are complex and subject to change and interpretation. Consult with a qualified tax professional to understand how these provisions apply to your organization’s specific circumstances.
