Why is your electricity bill so high?

If your electric bill has seemed higher than usual lately, it’s not in your head.

The average residential bill in D.C. rose to nearly $138 this June — up more than $28 from the same time last year, according to Pepco. And new record-high hikes in regional electricity prices could result in more increases for customers very soon. 

The cost of energy is causing thousands of D.C. residents to fall behind on bills and even lose electricity: Pepco shut off power to 2,464 customers in May and June, just as summer began in earnest, according to reporting by Sloane Airey at Washington City Paper. 

So why, exactly, is your Pepco bill so high? If you ask the utility, they’ll point to a few things: rising demand from industrial facilities and data centers, tightening supply, and growing costs to keep the regional power grid stable under pressure.

But consumer advocates and energy experts say that doesn’t tell the whole story. They argue that grid operators and regulators were slow to respond to foreseeable challenges, including the rapid growth of data centers, delays in bringing new clean energy projects online, and the retirement of aging fossil fuel plants. Meanwhile, Pepco customers have also been hit by a rate hike tied to infrastructure spending, which critics say was greenlit without proper oversight.

Why your bill just increased 

Most of the jump in your June bill (about $20 of it) comes from rising energy supply costs — specifically, a spike in what’s called a capacity charge. This charge applies to customers who buy their electricity through Pepco’s Standard Offer Service (SOS), which is the default option for most residential customers who don’t shop around for another provider.

Pepco buys power from the regional grid operator PJM Interconnection. PJM runs yearly capacity auctions to make sure there’s enough electricity available in future years during high demand, including extreme heat waves or cold snaps. The cost of that reserve power gets built into what Pepco pays for the supply, and it’s then passed straight to the customer, dollar for dollar. 

A recent PJM auction set a price that’s 1,034% higher (yes, you read that right) than what it was just two years ago, and that steep jump is now showing up on your bill.

Pepco’s role 

Supply charges aren’t the only reason Pepco might raise rates. From January to June of this year, the average residential bill rose $7.54 because of a separate rate hike Pepco imposed for infrastructure upgrades.

The Public Service Commission, which oversees Pepco, approved this hike for grid maintenance. The plan allows Pepco to bring in an extra $123.4 million over two years (2025-2026) to cover those costs. A second rate increase is set to take effect in January 2026 and will raise bills by another $3.80 per month for the average customer.

The plan drew sharp criticism from consumer watchdogs like the Office of the People’s Counsel and WePowerDC, a grassroots campaign advocating for a publicly owned energy utility in the District. These groups argued that the commission approved the increases without fully reviewing how Pepco spent ratepayer dollars under its prior plan.

“What the PSC did was refuse to review their spending and essentially took Pepco’s word that they were operating 100% prudence, which means they said every single dollar that they spent was efficient and frugal and needed,” WePowerDC spokesperson Harrison Pyros told The 51st. “In reality, that does not exist. No business or person spends every single dollar 100% frugally.”

One PSC commissioner agreed. In a dissenting opinion, Commissioner Richard Beverly warned that the commission had failed to perform a “prudence review,” an important oversight step meant to ensure utilities aren’t overspending or mismanaging funds.

“Unfortunately, the only thing that is clear to me about this arrangement is that ratepayers (including the Federal and District governments) are being given a bill for one hundred and twenty-three million dollars with a justification that, to me, could be summarized as ‘because Pepco said so,’” Beverly wrote. “I cannot, in good conscience, find that this arrangement is in the public interest, so I must respectfully dissent.”

The Office of the People’s Counsel, a watchdog agency that advocates for utility customers, has filed a lawsuit challenging the increase.

“We don't really know what investments are included,” said Ankush Nayar, the OPC attorney litigating the case. “They're saying, ‘we project that we're going to spend X amount of money on these projects in the future, trust us’… without anyone knowing whether those projects were completed or not, whether they're prudent, whether they were managed properly.”

In court briefs, both the PSC and Pepco defended the approval process for the increase. The PSC argued it has broad discretion under D.C. law to decide how and when to evaluate utility spending and said its staff had already examined the application in detail.

OPC’s case remains pending before the D.C. Court of Appeals. It has also filed a separate complaint with the Federal Energy Regulatory Commission (FERC), which oversees interstate electricity markets, alleging that PJM’s capacity market rules unfairly benefit large utilities at the expense of D.C. ratepayers.

PJM’s role

At the center of the cost problem is PJM’s struggle to bring new energy supply online fast enough to meet surging demand, driven largely by data centers, industrial growth, and extreme weather.

In 2021, PJM hit pause on reviewing most new energy projects, including wind, solar, and battery storage, because its application process was overwhelmed by a surge in proposals. The result was a backlog of more than 2,500 mostly renewable projects stuck in the queue.

Critics say that freeze created a bottleneck just as the grid was being strained by increased demand and the slow retirement of fossil fuel plants. 

“They literally shut the queue down for years,” says Ric O’Connell, executive director of GridLab, a nonprofit focused on grid reliability. “Meanwhile, demand was surging, and clean energy couldn’t get online fast enough to keep up.”

PJM now uses a revamped “first-ready, first-served” approval system and says it has cleared most of the backlog, reviewing about 140 gigawatts of mostly renewable projects. It expects to review another 63,000 megawatts by the end of 2026. But delays tied to permitting, financing, and supply chains are still holding many projects back, a PJM spokesperson told The 51st.

“If we don’t address these issues, it won’t matter how fast we process interconnection requests,” the spokesperson wrote in an email.

In the meantime, fossil fuels continue to dominate the region’s energy mix. In PJM’s latest auction, natural gas made up 45% of cleared resources, coal 22%, and nuclear 21%. Wind and solar combined accounted for just 4%.

That mismatch is already showing up in customer bills.

“If PJM had just been on top of things, we would have gotten a lot of wind and solar online; We wouldn't have these price pressures; We would have saved customers a lot of money,”  O’Connell says.

PJM also points to the area's high concentration of data centers as a major driver of regional demand and thus higher capacity charges to account for future data centers. Some critics have maintained that PJM relies on overly aggressive demand forecasts for future data centers, though PJM says it is finalizing a new methodology to better evaluate large customer requests, including speculative data center growth.

What support is available 

If you’re a Pepco customer looking for relief, there are programs Pepco and the District offer that can help.

The Residential Aid Discount program, or RAD, cuts distribution and surcharge costs for low-income customers. To qualify, residents must meet income guidelines and apply through Pepco or a local agency.

For those behind on payments, the Arrearage Management Program offers a payment plan where each on-time payment wipes out part of your past-due balance.

Seniors and disabled residents who receive the homestead deduction credit may qualify for a separate $7.50 monthly credit (RAD beneficiaries are not eligible), but that program is set to expire this year unless new funding is found, according to a PSC spokesperson.

The D.C. Department of Energy and Environment offers free solar installations for income-qualified residents. Participants can either install panels on their rooftops or join a community solar project. On average, the program cuts electricity costs by up to 50%, according to the D.C. DEE.

Pepco, for its part, says it’s working on additional support. The utility recently launched a bill management campaign aimed at connecting more customers to assistance programs and helping them reduce energy use. The utility is also launching a $5 million customer relief fund to help moderate and low-income customers afford their higher energy bills.

“We have been really aggressive in ensuring that our customers are made aware of energy assistance,” says Pepco’s director of external affairs, William Ellis. “So, if they're having trouble today, affording their bill because of the spikes... We want them to know that there are resources."

Still, the utility has faced criticism this summer for shutting off power to thousands of low-income customers during heat waves, citing unpaid bills. Advocates and residents say those disconnections disproportionately impact low-income households and contradict the company’s stated commitment to affordability and customer support. The utility drew backlash for suggesting that residents reduce AC use during dangerous heat to lower bills.

Meanwhile, the Office of the People’s Counsel is leading a task force to examine reforms to the auction-based pricing system. Recommendations are expected later this year, though no changes are currently underway, a PSC spokesperson said.

Earlier this year, Pennsylvania Gov. Josh Shapiro negotiated a $330-per-megawatt-day price cap with PJM to help keep costs in check. But PJM’s latest auction landed just a few cents below that ceiling — a sign that steep prices aren’t going away anytime soon.