Press Release

PUC Approves Smaller Than Requested Rate Changes for PECO’s Electric and Natural Gas Distribution Services

Published on 12/12/2024

Filed under: Electric Gas

Both Settlements Enable New Investments in Critical Infrastructure, Enhance Safety and Reliability, and Bolster Customer Assistance Programs

HARRISBURG – The Pennsylvania Public Utility Commission (PUC) today approved smaller than requested rate changes by PECO Energy Company (PECO) for both electric and natural gas distribution services.  The rate requests were filed on March 28, 2024. 

PECO – Electric Division

The Commission voted to approve a modified Joint Petition for Non-Unanimous Settlement (joint petition or settlement) reducing the company’s requested increase in annual operating revenues from approximately $464 million to $354 million – a 23.7% reduction – as well as significantly lowering PECO’s proposed increase in its monthly distribution customer charge, which will now increase $0.75 per month (7.1%) versus a proposed monthly increase of $3.78 (36%).  

Additionally, the settlement enables PECO to apply a one-time surcharge credit of approximately $64 million in 2025.  Under the settlement rates, and including the one-time surcharge credit in 2025, the monthly bill for a residential customer using 700 kilowatt hours (kWhs) per month will increase by $13.58, from $135.85 to $149.43 (10%), including default service generation, taxes and other surcharges.  In 2026, the bill for this customer will increase by an additional $2.70 per month, from $149.43 to $152.13 (1.8%), including default service generation, taxes and other surcharges.

In the company’s proposed filing, and including default service generation, taxes and other surcharges, the bill in 2025 for a residential customer using 700 kWh per month would have increased by $16.67 per month, from $135.85 to $152.52 (12.3%).  In 2026, the bill would still have increased by an additional $2.70 per month, but from $152.52 to $155.22 (1.8%).

In addition to substantial infrastructure investments to maintain and improve system reliability, the settlement strengthens the utility’s customer assistance program (CAP) by having PECO take the following steps:

• Participate in the Pennsylvania Department of Human Services’ data sharing program, consistent with the Commission’s order of June 13, 2024.
• Convene a stakeholder collaborative with its Universal Services Advisory Committee and interested parties to this case to discuss how PECO could implement automatic enrollment of non-CAP LIHEAP recipients in CAP.
• No later than April 1, 2025, add PECO’s health usage rider exemption language to the maximum CAP credit letters.
• Starting in 2025, include an additional $1 million in the Electric Low-Income Usage Reduction Program (LIURP).
• File a compliance filing in its Universal Services and Energy Conservation Plan – including financial, application and website enhancements for the company’s Matching Energy Assistance Fund.
• Enhance its customer service and consumer protection processes, including a more comprehensive evaluation of call center performance, a company review of low-income customer security deposits, termination notices and service disconnections, as well as an extension of speech analytics software involving universal service programs and other low-income customer issues.

Additionally, under terms of the joint settlement, PECO agrees not to file another general rate increase for its electric operations prior to March 16, 2026.

The joint petition was filed by PECO, the PUC’s independent Bureau of Investigation and Enforcement (I&E), the Office of Consumer Advocate (OCA), the Office of Small Business Advocate (OSBA), the National Railroad Passenger Corporation (Amtrak), Electrify America, LLC, EVgo Services LLC, the Philadelphia Area Industrial Energy Users Group (PAIEUG), the Southeastern Pennsylvania Transportation Authority (SEPTA), the Tenant Union Representative Network (TURN) and the Coalition for Affordable Utility Services and Energy Efficiency in Pennsylvania (CAUSE-PA) (collectively, TURN/CAUSE-PA), the City of Philadelphia, the Philadelphia Energy Authority, and Walmart Inc. (Walmart).

PECO provides electric distribution service to approximately 1.7 million customers in southeastern Pennsylvania and portions of York County.

PECO – Gas Division

The Commission also voted to approve a modified Joint Petition for Non-Unanimous Partial Settlement (joint petition or settlement) reducing PECO’s requested increase in annual operating revenues for gas distribution services from approximately $111 million to $78 million – a nearly 30% reduction.  The settlement also reduced the company’s proposal for a 36% increase in its residential gas distribution customer charge – instead allowing for a 10.2% increase from $14.25 to $15.70.  Additionally, the Commission rejected PECO’s request to implement a Weather Normalization Adjustment (WNA), which was the lone contested issue in this proceeding.

Under the settlement rates, the monthly bill for a residential customer using 80 Ccf per month will increase by $12.25, from $97.98 to $110.23 (12.5%), inclusive of Purchased Gas Costs, taxes and other surcharges.  In PECO’s proposed filing, the bill for this customer would have increased by $16.15 per month, from $97.98 to $114.13 (16.5%). 

In addition to new investments in its gas distribution system, information technology and communication system, PECO also agrees to the following commitments related to gas safety and customer programs:

• Commits to improving the consistency and accuracy of leak reporting from the field with more training and awareness of field personnel and performing quality audits.
• Building a new dashboard and implementing Synergie software to better present and analyze risk, including cathodic protection status and population density into its risk model.
• Continue identifying and locating inaccurate facilities.
• Starting in 2025, adding $500,000 in the Gas LIURP.
• Increasing the budget for natural gas Energy Efficiency and Conservation by $350,000 per year.
• Revising and strengthening its Neighborhood Gas Pilot, Small Business Grant Program and Gas Customer Safety Program.

Additionally, under terms of the joint settlement, PECO agrees not to file another general rate increase for its gas operations prior to March 16, 2026.

The joint petition was filed by PECO, I&E, OCA, OSBA, PAIEUG, SEPTA, CAUSE-PA and Walmart.

PECO provides natural gas distribution service to more than 552,000 customers in southeastern Pennsylvania, adjacent to, but exclusive of, the City of Philadelphia.

About the PUC

The Pennsylvania Public Utility Commission balances the needs of consumers and utilities; ensures safe and reliable utility service at reasonable rates; protects the public interest; educates consumers to make independent and informed utility choices; furthers economic development; and fosters new technologies and competitive markets in an environmentally sound manner.

Visit the PUC’s website at puc.pa.gov for recent news releases and video of select proceedings. You can also follow us on X (formerly Twitter), Facebook, LinkedIn, Instagram, and YouTube. Search for the “Pennsylvania Public Utility Commission” or “PA PUC” on your favorite social media channel for updates on utility issues and other helpful consumer information.

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Docket Nos.:
R-2024-3046931
R-2024-3046932

Contact:

• Nils Hagen-Frederiksen
  Press Secretary
  717-418-2701
  nhagen-fre@pa.gov
• David Hixson
  Deputy Press Secretary
  717-772-2766
  dhixson@pa.gov