PECO: Your Bill, Rates, and Service Updates
Title: PECO's Amazon Deal: A Win for Data Centers, a Question Mark for Ratepayers?
The Federal Energy Regulatory Commission (FERC) just gave the green light to a transmission service agreement between PECO Energy and Amazon Data Services. Sounds dry, right? But buried in the regulatory language is a potential shift in how we all pay for the coming data center boom.
The agreement essentially outlines how Amazon will foot the bill for grid upgrades needed to power its new data center in Falls Township, Pennsylvania. FERC waved away concerns from PJM Interconnection’s market monitor about the impact on capacity and energy costs, stating those issues were outside the scope of this particular agreement.
The Mobile-Sierra Presumption: A Shield for Negotiated Rates?
FERC invoked the Mobile-Sierra presumption, which basically says that freely negotiated contracts between independent parties are considered "just and reasonable" unless there's serious harm to the public. It’s a high bar to clear (think of it as the regulatory equivalent of "innocent until proven guilty"). This framework seems reasonable enough on the surface, but it's worth asking, just how "free" is a negotiation when one party is a utility with a service monopoly and the other is a tech behemoth?
Commissioner Judy Chang raised some valid points in her concurring statement. She highlighted the "significant questions" about customer protections in these kinds of deals. Chang worries that FERC and state utility commissions need to collaborate more closely to prevent unjustified cost increases for both retail and wholesale customers thanks to these large load additions.
She’s not wrong. FERC regulates wholesale rates, while states regulate retail. This creates potential gaps where costs could be shifted onto consumers without proper oversight. Chang specifically mentioned FERC’s current "higher of" policy, designed to protect existing transmission customers from network upgrade costs related to generator interconnections. If rolling those upgrade costs into transmission rates would raise the average cost for existing customers, the transmission provider can charge an incremental cost rate for the new service, insulating existing customers from the system upgrade costs.
The Looming Rate Hike: A Sign of Things to Come?
Adding fuel to the fire, PECO customers are already bracing for a 6% increase in electricity supply rates, effective December 1, 2025, jumping to 11.024 cents per kilowatt hour. PPL customers are also looking at a 3.7% increase, to nearly 13 cents per kilowatt hour. Now, PECO is quick to point out that this increase applies to supply rates, which they claim they don't control. PECO says they are not raising rates, but that the price of electricity is now based on wholesale market prices. PECO, PPL electricity supply rates are set to increase on December 1
PECO's website states: "Deregulation has transformed utilities like PECO from a company that produced electricity to a company that now purchases electricity." The increase is attributed to factors like rising demand, power plant retirements, and the PJM capacity market. (PJM, the regional electric transmission organization, runs a competitive capacity auction to procure future electricity generation resources to ensure grid reliability.)
But here's where I get skeptical. While PECO says that the PJM capacity market significantly influences electric supply prices. The most recent auction drove prices up further due to anticipated challenges with availability of resources to meet rising demand and decreased supply due to power plant retirements. Capacity prices are part of the supply charge and act as a type of insurance for grid reliability under changing circumstances, including increases in demand and extreme weather conditions.
Is it purely coincidental that these rate hikes are happening as massive data centers are coming online, placing unprecedented demands on the grid? Correlation doesn't equal causation, but the timing is definitely… interesting.
And this is the part of the report that I find genuinely puzzling. PECO wants an "all of the above" commitment to building and preserving baseload electric generation capacity. This sounds suspiciously like a call for more fossil fuel plants, just as the world is supposedly transitioning to renewables.
The Pennsylvania Public Utility Commission (PUC) is urging customers to shop around for cheaper rates. But let's be real: how many consumers have the time or expertise to navigate the complexities of electricity markets? And even if they do, how much real savings can they achieve?
Whose Burden Is It, Anyway?
The FERC decision highlights a growing tension between the needs of the digital economy and the pocketbooks of everyday electricity consumers. Data centers are energy hogs, plain and simple. As more of our lives move online, their demand for power will only increase. The question is: who should bear the cost of ensuring that the grid can handle this surge? Is it fair to place the burden solely on existing ratepayers, or should companies like Amazon shoulder a greater share of the responsibility?
Chang's call for a proactive framework is spot-on. FERC needs to develop clear, consistent guidelines for assessing customer protections in these agreements. Leaving it to a patchwork of bilateral deals risks creating loopholes and shifting costs onto those least able to afford them.
The Data Doesn't Lie
It looks like we're heading towards a future where cheap data storage comes at the expense of higher electric bills.