Peco electric rates to rise by less than 10 percent under settlement

Peco Energy Co. said Tuesday that it had reached a settlement on proposed electric and gas rate increases that will go into effect on Jan. 1.

The Philadelphia utility now estimates that electric rates for residential customers will go up by less than 10 percent at the end of the year, when state-mandated rate caps expire. Earlier this year, some consumer advocates claimed customers would face doomsday increases of up to 30 percent.

The settlement will allow Peco to increase electric rates by $225 million. It had requested a $316.4 million increase when it filed its request on March 31.

Peco settled for a $20 million increase in gas rates - less than half the $43.8 million requested.

The settlement, reached with major parties that had filed objections with the Pennsylvania Public Utility Commission, still requires PUC approval. The commission typically approves settlements, unless it finds flaws.

The increase applies only to the charge Peco assesses for delivering energy. The cost for generating electricity - typically about two-thirds of the total bill - will be determined by market rates after Jan. 1. Gas rates already are subject to regular adjustments to reflect the rise and fall of commodity markets.

Cathy Engel, Peco's spokeswoman, said the utility now estimates that the total monthly bill for a typical residential electrical customer will increase Jan. 1 by less than 10 percent, or $8.

Under a 1996 law that turned utilities into electric distribution companies, Peco's rates were frozen through 2010 to allow it to collect "transition" charges to recover its investments.

Customers who do not choose to shop for a power supplier will continue to be served by Peco, which is required by law to be the supplier of last resort. For more information on the transition: http://www.pecoanswers.com.