PECO withdraws its rate hike case after backlash from Pa. governor, lawmakers

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Under pressure from Pennsylvania Gov. Josh Shapiro, PECO has withdrawn its recent rate hike proposal filed with the state Public Utility Commission.

The Governor’s office said in a statement the move resulted from negotiations with the company and called it a “major win for the people of Pennsylvania,” adding that it “will prevent unreasonable price increases for 1.7 million Pennsylvanians.”

“PECO’s proposed rate case would have increased Pennsylvanians’ utility bills, but I demanded that their CEO put customers first and withdraw their rate hike request,” Shapiro said in a statement. “PECO listened, and I appreciate that the company is willing to prioritize affordability at a time when Pennsylvanians are worried about rising costs. This withdrawal is the right step for consumers – and we’re going to keep fighting to make sure utility companies are focused on keeping costs down while maintaining safe and reliable service.”

PECO pointed to affordability issues for its ratepayers as the reason for the unprecedented withdrawal.

“While our filing with the PUC would have provided needed improvements in safe and reliable energy delivery, we recognize that Pennsylvanians are struggling with basic necessities like gas, food, and energy and have decided to withdraw our proposal,” David Vahos, PECO president and CEO said in a statement. “We look forward to working with stakeholders across the region to find long-term solutions to high energy costs and to make needed investments at another time.”

Pennsylvania’s Public Advocate Darryl Lawrence praised the move, saying it’s the first time he knows of a utility withdrawing a rate case in his more than two decades at the Office of Consumer Advocate.

“I’ve never seen this before,” Lawrence said. “I certainly appreciate the governor’s efforts and I applaud this decision by PECO’s leadership to do the right thing. Because affordability is at the top of everyone’s minds. Now is not the time to increase utility rates.”

The Pennsylvania Utility Law Project also applauded the move and pointed to the number of utility shut-offs in 2025.

“Last year, while PECO was collecting record profits, it nevertheless disconnected service to more than 126,000 families because these households could not afford to pay their bills,” Elizabeth Marx, executive director of the law project, said in a statement. “[Our] mission has always been to advocate for low-income and vulnerable utility customers, and we are encouraged that PECO has chosen to listen — recognizing that hardworking Pennsylvanians cannot continue to absorb rate increases.”

PECO electricity customers in Philadelphia and its suburbs had been facing potential rate hikes of 12.5% beginning in 2027, while the company’s suburban natural gas customers were looking at an additional increase of 11.4%.

The company filed two requests to raise rates with the Pennsylvania Public Utility Commission on March 31. The proposal would have increased a typical electricity customer’s bill by $20.08 a month and a typical gas user’s by $14.52 a month. Some residents faced a combined $35 monthly rate hike.

PECO’s previous rate hike, which kicked in at the beginning of 2025, resulted in record profits for the company. Net income shot up 47.7% to $814 million in 2025 over the previous year, according to earning reports by its parent company Exelon.

Exelon President and CEO Calvin Butler earned more than $15.6 million in 2025.

The proposal faced an immediate backlash. Shapiro called it “pure greed.”

The rate of return, or return on equity, for investors that PECO was seeking with this new rate hike was 10.95%, which is much higher than the national average, said Marissa Gillett, a senior fellow at the American Economic Liberties Project and a former chair at the Connecticut Public Utility Commission.

GOP lawmakers had also pushed back. A group of Bucks County Republican state legislators sent a letter to PECO asking the company to “reconsider” its proposal.

“It is not lost upon us that PECO received a rate increase of 10% for electric and 12.5% for natural gas in January 2025. Since those rate increases were implemented, PECO’s net revenue increased 47.7% over the previous year to $814 million in 2025,” reads the letter signed by four Republican state representatives and one state senator.

The company had sought an additional $429 million to pay for electricity infrastructure investments and $81 million for natural gas upgrades. Investor-owned utilities make their profits from infrastructure replacement and expansion. PECO serves 1.7 million electricity users in southeastern Pennsylvania, including more than 553,000 gas customers in suburban Philadelphia.

PECO had said it planned to invest $10 billion in infrastructure over the next five years to shore up the electrical grid and replace existing leaky natural gas pipelines. The company said replacing the lines would reduce the release of the greenhouse gas methane, while upgrading electrical power infrastructure with state-of-the-art technology would ensure that the lights remain on during increasingly severe storms.