About two weeks after seeking a combined $510 million rate increase for its electric and gas operations, PECO Energy withdrew its rate requests from the Pennsylvania Public Utilities Commission on Thursday over affordability concerns.
“In the wake of the filing … and reflecting upon concerns expressed by customers, policymakers, regional leaders, and community partners, PECO has determined to seek leave to withdraw [its proposal] and maintain electric distribution rates at current levels,” the Philadelphia-based company told the PUC.
PECO on March 30 asked for a $429 million, or 12.5%, annual revenue hike for its electric operations and an $81 million, or 11.4%, increase for its gas business.
“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 press release.
PECO said it would continue to make ongoing investments in its electric and gas systems needed for safety, maintenance and reliability.
PECO will evaluate the timing and approach for future capital investments and potential regulatory filings, its parent company, Exelon, said in a U.S. Securities and Exchange Commission filing on Thursday.
“Any decisions related to capital investments to support longer-term grid modernization will be informed by customer affordability considerations, system reliability needs, and ongoing engagement with regulators and other stakeholders,” Exelon said.
PECO will focus on efforts to help lower energy supply prices, which have led to “record profits” for power plant owners, the utility said. PECO’s energy affordability strategy includes advocating for market reforms, expanded renewable energy, energy storage and energy efficiency, and entering into power purchase agreements with power suppliers.
“If competitive markets fail to meet customer needs despite these efforts, PECO stands ready to invest in building and owning generation through partnerships with top developers — but only as a last resort when the market is unable to provide sufficient supply to ensure energy security for Pennsylvania customers,” the company said.
Exelon said it plans to redeploy and delay capital projects and “execute operational efficiencies” in the wake of the decision to pull the rate hike requests. The Chicago-based utility holding company said the decision wouldn’t affect its expected “adjusted” operating earnings for 2026 or its forecast for its operating earnings growth to be near the top end of the 5% to 7% range through 2029.
PECO’s withdrawal of its rate hike requests is a sign of a weakening regulatory environment in Pennsylvania, according to Andrew Bischof, an equity analyst with Morningstar. However, PECO’s delayed rate case filing and any financial effect is “manageable,” he said in a note on Thursday.
With little generation expected to be built in the PJM Interconnection, Morningstar expects power costs to remain high in the region, with “continued stakeholder pressure” over rising utility bills, Bischof said.
“PECO represents 22% of Exelon's 2025 rate base and 19% of Exelon's $41.3 billion capital investment plan, making it an important driver of management's consolidated 5%-7% annual earnings growth rate target,” Bischof said.
