Pittsburgh Electric Utility Seeks to Cover $7 Million Shortfall
Price to Compare rate consumers in the Duquesne Light Company (DLC) will face a 12% rate hike ths fall. The Pittsburgh utility recently asked the PA PUC to raise default service supply for all rates. This comes hard for consumers after the utility filed rate cuts in July that suggested a possible decrease was coming. According to DLC, the hike is needed as the current rate causes a $7 million shortfall that won’t cover PJM’s auction results for the 2025-2026 delivery year.
How Did an Auction Cause the DLC Rate Shortfall?
The PJM interconnection operates the grid that serves the mid-Atlantic region. PJM also runs a capacity electricityy market. That means utilities and other electricity suppliers must line up enough power to reliably meet demand. Utilities can either contract with power plants for energy or line up capacity through PJM‘s market auctions. For auctions, PJM holds capacity auctions in May to line up generators three years ahead of when it’s needed.
Normally, auction price results are somewhat low; usually running from $20 to $30 per MW-day. But this year, the FERC delayed the auction over PJM‘s capacity market pricing.
PJM market participants expected prices to be higher due to expected higher demand and fewer power plants available. That is, the number of power plants being retired created a shortfall in the number of replacements that could be ready to cover for them. But according to industry watchers, the declining number of available generators had been staring PJM in the face for years. The grid operator had long been struggling to get renewable energy powerplants through its interconnection que at a reasonable speed. In spite of reforms, a backlog of 260,000 MW of renewable energy and battery storage sat waiting in February, 2024.
Furthermore, those new powerplants that had been connected, including solar and wind, had not had their output measured enough times to see what they were capable of. As a result, the market didn’t have a sense of how much capacity it had available. So, when the auction finally happened in June, the market sort of punted with its “bad-case scenario” ball.
When the dust settled, prices for 2025/2026 capacity were startlingly high; nearly ten times above normal. The average 2024 capacity auction price of $28.92 shot up this year to $269.92. But in Maryland, Baltimore Gas and Electric saw its previous year’s capacity price explode from $28.92 per MW-day in 2024 to $466.35 per MW-day.
How Much Will DLC Make From This Hike?
When it comes to bills, capacity prices do have an effect. For example, in 2023/2024, they accounted for roughly 8% of customer electric bills in the PJM footprint. However, DLC won’t make a dime from it. Because by PA law, the default supply rate is a pass through charge. As a result, ratepayers pay what DLC pays for the energy without mark up.
DLC estimates its new PTC rate of 11.51 cents per kWh to run from September 1, 2024 through November 30, 2024. The PTC rate from December 1, 2024 to May 31, 2025 has yet to be announced.
Proposed Distribution Rate Hike
Back in March, DLC requested a tariff increase designed to cover its costs by raising customer delivery charges by $101 million. As a result, that request would have hiked the monthly bill of a customer using 600 kWh per month by about 6.52%. As of August 16, parties in this rate case had agreed to recommend that the PA PUC approved all-new terms and conditions for the tariff. While the agreement includes more transparency over DLC power plants, earnings, and clearer and more simplified language for universal service program applicants, residential ratepayers will pay only 3.99% more.
This distribution tariff is the charge that both price to compare customers and those who use an electric supplier must pay for having power delivered to their home.
What Your September PTC Bills Could Be
If we assume the same 600 kWh amount as the PA PUC, a Pittsburgh electric customer could seek an estimated bill (not including taxes or other additional riders) look like this:
| DLC Price to Compare Supply Charge: | DLC Charges: |
| 600 kWh @ $0.1151 cents per kWh = $69.06 | DLC Customer Charge: $13.00 |
| Energy Charge: 600 kWh @ $0.082479 cents per kWh = $49.49 | |
| Total DLC Charges: $62.49 | |
| Total Price to Compare Charges: $69.06 | Total DLC Charges: $62.49 |
| Estimated Total Bill: | $131.55 |
Cover Your Costs, Stay Ahead of the Shortfall
While it’s too early to say what the next likely PTC rate hike will look like in December, Pittsburgh consumers should be prepare for the worst. The best way to stay ahead of rising energy costs in PA is to shop for the cheapest electric rates now while electricity rates are still low. Right now, you can shop rates that beat DLC‘s current PTC by about 2 cents per kWh. That’s potential savings of $22 off the proposed September rate. And the best place to shop and lock in long terms plans is at https://www.paenergyratings.com.