Commercial Electric Rates Surge 20% in Two Years

Since April, 2024, U.S. commercial electricity prices have been moving up steadily, rising from 12.66 cents on average to 13.51 cents, or 6.71%. But Pennsylvania businesses have found those rates climbing far faster. In 2024, capacity auction results in the PJM grid soared due to tight energy supplies. And PA businesses soon saw their commercial electricity rates jump by nearly 20%.

However, the rising commercial electricity cost not only reflects the surging price for energy supply but also the higher rates PA utilities charge to deliver and maintain the high kilowatt demand some businesses need.

According to recent U.S. Energy Information Agency data, PA ranks tenth in the nation for the highest percentage increase to commercial electric rates.

Why Investor-Owned Utility Rates Are Actually Higher Than the Average

EIA reports prices in “bundled” rates. That is, it includes both the energy supply rate and the utilities’ commercial service rate in its total price per kWh. For example, the EIA reported that the bundled rate for commercial electric rates in PA averaged 11.49 cents per kWh in April, 2024. This “bundle” distinction is useful in comparing energy prices between state-regulated and deregulated energy markets, such as PA, where businesses can shop around for their own retail energy supplier.

Four major investor-owned utility companies serve 99% of electricity customers in PA: Duquesne Light Co, FirstEnergy Pennsylvania, PECO, and PPL.

While the EIA’s 2024 Utility Bundled Retail Sales-Commercial data includes rates from these four big utility companies it also includes rates from the state’s 10 coops and municipal utilities, four small investor-owned utilities, and five “behind the meter” renewable projects. But because the state’s coops and municipal utilities tend to have slightly lower commercial electric rates, researchers with PAEnergyRatings.com discovered that their prices lowered the average for the whole state.

As a result, analysts found that commercial electric rates among the state’s four investor-owned utility companies in 2024 had an average cost of 13.99 cents per kWh. That is 22% higher than the EIA’s average rate for the whole state. Bundled commercial utility rates for these four utility companies ranged from 11.77 cents per kWh (PPL) to 15.92 cents per kWh (FirstEnergy of PA).

How Much Investor-Owned Utility Rates Actually Cost

According to the EIA, commercial electric rates in PA averaged 11.49 cents per kWh in April, 2024. Given the rising costs from tight power supply as well as grid upgrades, transmission, maintenance, and storm damage repairs, all of PA’s electric utilities —investor owned, municipals, and coops alike — have seen their costs rise. By April, 2026, the average rate increased to 13.68 cents per kWh, or 19.06%.

Armed with that percentage, analysts multiplied the 2024 bundled rates from the commonwealth’s four major investor owned utility companies by 19.06% to estimate their 2026 bundled electric rates.

*Includes Met-Ed, Penelec, Penn Power, and West Penn Power

Assuming an average monthly commercial usage of 6,000 kWh, a monthly bill could add up to about $1,000.00; roughly $160 more than 2024.

What it Means for Commercial Electric Rates in PA

Unlike residential electric bills where most of the cost comes from the utility, the cost for commercial electricity lies mainly in the energy supply rate. And with the EIA forecasting that electricity rates will likely increase this coming fall, business customers may see their default supply rates from their utilities rise further when those rates expire on November 30, 2026.

Rising commercial electricity prices make it crucial for PA businesses to keep informed about the lowest electricity rates. For that reason, businesses that stay with their utility’s default supply rate are likely paying significantly more for their commercial electricity going into 2027 than those who shop for PA energy suppliers.

Therefore, business owners seeking the best deal for their power needs can save by switching from their utility’s default commercial electric rate to a retail electricity provider. When businesses shop and compare PA electricity rates on commercial comparison web sites such as PAEnergyRatings.com, they often find deals on electricity supply and negotiate contracts that may save them up to 50% vs their utility’s current default rate.

Methodology

Analysts found that EIA data for “bundled” commercial electricity rates rose in PA by an average of 19.06% from April, 2024 to April, 2026. However, as EIA data contained investor-owned utilities, coops, and municipal utilities, analysts saw that this provided an inaccurate picture of commercial electricity rates in PA. Since investor owned utilities provide most of the electric service in the state, analysts factored in EIA data for average utility rates (EIA-861- schedules 4A & 4D and EIA-861S) from the most recent year (2024) to isolate rates from the state’s four major investor-owned utility companies. The percentage increase was then applied to the four utilities’ 2024 rates to estimate bundled commercial electric rates for the four main utilities in PA for 2026.

Sources:

EIA Electric Sales, Revenue, and Average Price
https://www.eia.gov/electricity/sales_revenue_price/

EIA Electric Power Monthly
https://www.eia.gov/electricity/monthly/

EIA Electricity Explained — Factors affecting electricity prices
https://www.eia.gov/energyexplained/electricity/prices-and-factors-affecting-prices.php