{"id":186191,"date":"2026-05-07T12:19:07","date_gmt":"2026-05-07T12:19:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-pa\/186191\/"},"modified":"2026-05-07T12:19:07","modified_gmt":"2026-05-07T12:19:07","slug":"shapiro-demands-a-stop-to-excessive-utility-rate-increases-but-has-little-authority-to-force-change-2","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-pa\/186191\/","title":{"rendered":"Shapiro demands a stop to \u201cexcessive\u201d utility rate increases, but has little authority to force change"},"content":{"rendered":"

Spotlight PA<\/a> is an independent, nonpartisan, and nonprofit newsroom producing investigative and public-service journalism that holds power to account and drives positive change in Pennsylvania. Sign up for our free newsletters<\/a>.<\/p>\n

HARRISBURG \u2014 As Pennsylvanians struggle with rising energy prices, Gov. Josh Shapiro wants the commonwealth\u2019s utility companies to control costs and stop seeking \u201cunacceptably high\u201d rate increases.<\/p>\n

Otherwise, the Democratic governor warned in a recent letter to utility leaders, he will \u201cvocally and forcefully\u201d oppose their requests for rate hikes.<\/p>\n

\u201cWe have reached a tipping point,\u201d Shapiro wrote in the letter, which was obtained by Spotlight PA. \u201cThis is a moment to put your customers first and change the behaviors causing rate increases.\u201d<\/p>\n

Energy bills are rising across Pennsylvania and nationally, driven by a number of factors \u2014 some of which are beyond utilities\u2019 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\u2019 bills.<\/p>\n

But Shapiro argues that utilities\u2019 \u201cexcessive\u201d rate increases are a core driver of rising costs and he wants to fundamentally change how those rates are set.<\/p>\n

PPL among utilities singled out for high profit margin in industry watchdog report<\/a><\/p>\n

The governor\u2019s letter lays out three steps he wants companies to take when seeking rate increases, including changes to how they finance infrastructure investments and how their profits are determined.<\/p>\n

It\u2019s unusual for a governor to intervene directly in the rate-making process. Shapiro has no formal role in determining the rates utilities can charge, which must be approved by the state Public Utility Commission, an independent agency. Instead, he appears to be betting on the power of the bully pulpit to get the companies to change their business practices.<\/p>\n

In a response to the governor, the Energy Association of Pennsylvania, which represents electric and natural gas utilities, did not address whether its members will comply with his demands.<\/p>\n

The companies follow the process established by state law when seeking rate increases, wrote Andrew Tubbs, the group\u2019s president and CEO.<\/p>\n

Elizabeth Marx, executive director of the Pennsylvania Utility Law Project, which advocates for low-income utility customers, called the letter \u201ca huge step forward that really needed to happen.\u201d<\/p>\n

But, she cautioned, the proposals Shapiro outlined would not immediately reduce residents\u2019 bills without buy-in from the Public Utility Commission, and other legislative reforms.<\/p>\n

In a statement, a spokesperson for the commission said the agency \u201cevaluates each rate case through a formal, transparent process\u201d and that its decisions are \u201cbased on the specific facts and evidence in the case record.\u201d<\/p>\n

Addressing Pennsylvanian\u2019s rising energy bills has been a major focus for Shapiro, who last year negotiated an agreement<\/a> with the region\u2019s grid operator to lower a cap on wholesale electricity prices and is pushing for further changes<\/a>.<\/p>\n

The governor\u2019s latest salvo against the state\u2019s utility companies comes after he successfully pressured PECO, the largest electricity company in the commonwealth, to back off a proposed rate hike that he described as<\/a> \u201cpure greed.\u201d In an unprecedented move, PECO withdrew the request<\/a> and its CEO later stepped down.<\/p>\n

Shapiro\u2019s office has received a steady stream of messages from Pennsylvania residents squeezed by their utility bills, records obtained through the state Right-to-Know Law show.<\/p>\n

\u201cI can\u2019t believe how high our energy bill is and there seem[s] to be no relief,\u201d one resident wrote in an email to the governor\u2019s office in January.<\/p>\n

\u201cThe cost of electric is untenable for working families,\u201d someone else wrote.<\/p>\n

\u201cCan you please do something about the unbelievable rising costs of heating our home?\u201d another resident asked.<\/p>\n

In 2025, a record number of households had their electricity or natural gas service shut off after falling behind on their bills, according to the Pennsylvania Utility Law Project.<\/p>\n

Terminations have increased by more than 25% since 2022, breaking new records each year of the past three years.<\/p>\n

Profits under scrutiny<\/p>\n

The Public Utility Commission is an independent state agency that determines how much utilities can spend, how much they can charge their customers, and how much they can earn in profits. Commissioners are appointed by the governor and must be confirmed by the state Senate.<\/p>\n

The commission evaluates utilities\u2019 rate requests in complex legal proceedings, which often involve public hearings, testimony from expert witnesses, and thousands of pages of documents.<\/p>\n

In 2024, utilities sought an unprecedented number of rate increases, straining the commission\u2019s time and resources, Chairman Stephen DeFrank told lawmakers at a hearing earlier this year.<\/p>\n

In theory, the rate-making process finds a balance between keeping rates affordable for customers while ensuring that utilities can invest in the infrastructure needed to ensure reliable service and maintain their own financial stability. By law, utilities are entitled to recover \u201creasonably incurred\u201d expenses, as well as a fair return on their investment.<\/p>\n

But consumer advocates have long argued that the process is skewed in favor of utility companies, allowing them to earn higher returns on their shareholders\u2019 investment at customers\u2019 expense.<\/p>\n

Too often, Shapiro said in his letter to utilities, determinations about their profits amount to little more than \u201ceducated guesses.\u201d<\/p>\n

Instead, Shapiro wants utilities to account for the returns their shareholders earn via a competitive, market-based process, or accept a rate of return broadly in line with the stock market as a whole \u2014 a major change that could significantly lower profits for the companies.<\/p>\n

Mark Ellis, a consultant who previously worked for one of the largest utility holding companies in the U.S., has long called for this kind of change.<\/p>\n

No state currently takes this approach, he said, which would rely on competition, instead of a regulator\u2019s determination, in setting utilities\u2019 profits \u2014 similar to the way those companies currently raise debt.<\/p>\n

The move \u201cchanges the entire incentive structure for how utilities spend ratepayer money,\u201d Ellis said, \u201cfinally bringing market discipline to the most important place it\u2019s been missing.\u201d<\/p>\n

Shapiro also wants utilities to lower costs by changing how they raise money for infrastructure projects and to explain more clearly how those investments will benefit customers.<\/p>\n

In his budget address in February, Shapiro also announced<\/a> that four of Pennsylvania\u2019s largest electricity companies had voluntarily agreed to end so-called \u201cblack box\u201d settlements that obscure how much profit they earn from rate increases and eliminate reconnection fees for customers whose service was shut off.<\/p>\n

Shapiro says utilities must file a description of how they will comply with these principles with an attorney in his office focused on energy affordability, a newly created position that was filled in late April<\/a>.<\/p>\n

BEFORE YOU GO\u2026 If you learned something from this article, pay it forward and contribute to Spotlight PA at spotlightpa.org\/donate<\/a>. Spotlight PA is funded by foundations and readers like you<\/a> who are committed to accountability journalism that gets results.<\/p>\n

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