Governor Josh Shapiro sent a letter to 24 electric, gas and water utilities on April 29 urging them to control costs and stop seeking “unacceptably high” rate increases, WHYY reported.
The letter highlighted 13 Pennsylvanian utilities that wanted $975 million in additional rates in 2025 “after those very same utilities earned a total of $1.4 billion in profits in 2024.”
Shapiro argued that utilities’ “excessive” rate increases are a main driver of rising costs, so he proposed three benchmarks for utility companies: borrow more money more cheaply, provide a transparent cost-benefit analysis of the infrastructure investments connected to a given rate increase, and end “black box” settlements that obscure how much profit is earned from rate increases.
“Creating real value for customers also means maximizing existing grid resources in ways that control costs and defer the need for future upgrades,” Shapiro wrote. “You must also describe explicitly what amount of your requested rate increase will be remitted to shareholders through corporate dividends or other means, as compared to what would be used to directly advance the needs of your customers.”
Rates are approved by the state Public Utility Commission, an independent agency which determines how much utilities can spend, how much they can charge their customers, and how much they can earn in profits. According to Spotlight PA, some rate increases are beyond utilities’ control.
“The rapid growth of data centers has contributed to a surge in demand for electricity, prompting a spike in wholesale prices, which, in turn, drives up residents’ bills,” the wrote.
In a response, the Energy Association of Pennsylvania did not say whether its members will comply with the benchmarks.
In April, Shapiro appointed public interest attorney Mark Szybist to serve as special counsel for energy affordability as part of Pennsylvania’s first energy affordability watchdog. Earlier that month, PECO withdrew a proposed rate hike after “taking into consideration conversations with Gov. Josh Shapiro.”
“Governor Shapiro just did what state and federal regulators have refused to do for decades: tell utility monopolies that the era of guaranteed excessive profits at ratepayers’ expense is over,” said Mark Ellis, Senior Fellow at the American Economic Liberties Project. “His letter endorses a principle at the core of our research: Utility returns should reflect the actual market cost of capital, not inflated administrative guesswork that enriches Wall Street at the expense of every household, business, and organization served by an investor-owned utility in the country.”
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