Why is my Pepco bill so high?
If you’ve had sticker shock from your recent Pepco, you’re not alone. Most Pepco customers are seeing substantial increases in their monthly bills.
Why are bills going up?
Your energy bill is going up mostly because the costs Pepco charges to deliver electricity to your home have been rising significantly in recent years. Very cold or hot temperatures also drive up your bill because you use more energy to heat or cool your home.
Since 2020, Pepco’s delivery charges—to pay for the distribution system, not the electricity itself—have increased 33 percent from 4.6 cents per kwh to 6.2 cents per kwh. A kilowatt hour (kwh) is the unit used to measure how much electricity you use in your home.
When combined with increased electricity use because of especially cold or hot temperatures, increased distribution rates will cause customers to experience much larger bills than usual.
The graph above is taken from OPC’s June 2024 report, Maryland’s Utility Rates and Charges. The report has helpful charts and figures showing how rates have gone up for most—but not all—Maryland gas and electric utility customers. It explains some of the main categories of charges on your utility bill as well as reasons for the rate increases.
Generally, distribution charges only go up because they are based mostly on utility spending on new, long-lasting infrastructure, which increases utility profits as customers pay for the infrastructure through rate increases. Infrastructure includes, for example, electric wires and poles, substations, meters, computers, trucks and other equipment.
Supply costs are the other major component of your electric bill, separate from distribution costs. Electric supply costs include costs for electricity generation and “bulk” transmission. Bulk transmission lines are big power lines that generally carry large quantities of electricity over long distances. Generation means the output of power plants, such as fossil-fuel power plants or renewable energy such as wind and solar. Supply costs go up and down from year to year. Pepco’s supply cost for electricity in winter 2025 is about the same as 2024.
An additional increase in the electric supply cost is coming in June because of major increases in market prices for generation. In a report we issued in August 2024, we explain how the market for generation capacity results will cause an average increase in Pepco customer electric bills of about $14 per month. Those increased costs will be on top of other supply costs that OPC has been challenging before federal regulators and courts over the past several years.
What about the EmPOWER program costs on my bill?
Pepco customers are also seeing higher costs in their bills for the company’s EmPOWER program. The EmPOWER surcharge funds programs that can help you reduce your energy consumption, reduce greenhouse gas emissions, and save you money. EmPOWER programs must be approved by the Maryland Public Service Commission. The Commission only approves the programs if it finds that they are cost-effective overall—meaning that the energy savings will result in an overall reduction in customers’ bills that is greater than the surcharge amounts.
The bill increases relate, in part, to legislation enacted in 2024 requiring the elimination of a large unpaid balance for EmPOWER programs and services. The balance built up over time following a 2008 Maryland Public Service Commission order that allowed Pepco to charge customers only a portion of EmPOWER costs in the year they were incurred, while earning carrying charges on the amount that was not paid. This arrangement was very costly for customers—like carrying a credit card balance over decades without paying down the principal balance. Under a 2022 Commission order, the unpaid balance will be eliminated over several years through an increase in the EmPOWER surcharge, ultimately saving customers tens of millions of dollars each year. In the 2024 legislation, the General Assembly significantly reduced the rate of return that utilities are being paid on the balance (akin to an interest rate) in future years, reducing the customer costs of paying down the unpaid balance.
In January 2025, the EmPOWER rate for Pepco customers rose from $0.011056 per kWh to $0.013790 per kWh to pay for the additional costs of eliminating the unpaid balance and other EmPOWER cost changes. For a residential electric customer using 900 kWh per month, the change amounts to an increase of $2.46 per month, or a total EmPOWER charge of $12.41 per month.
More information on these programs and how to participate is available here.
What can I do to keep my bill from increasing?
Most of your bill is calculated based on your usage. Using less electricity over the month will lower your bill. You should consider reaching out to programs, including Pepco’s EmPOWER program, that can make your home more energy efficient. For lower-income households, free and low-cost programs are available to people through the MD Department of Housing and Community Development. Visit the “Energy Bill Savings” section on our website to learn more.
If you want to start small on your energy efficiency journey, call Pepco and request a FREE home energy audit. When you call, they will schedule a time for someone to come to your home and check for quick ways you can save money by reducing your usage. They will provide you with free energy saving products for your home like LED lightbulbs, a smart thermostat, water heater pipe insulation, and more.
Where can I get help?
If you are falling behind or struggling to pay your gas and/or electric bill, there is help available. Visit the “Get Help” section on our website for resources.
Note: The distribution rates referenced above are Pepco’s base rates which may vary from what you see on your bill because of additional adjustments, such as adjustments made for weather and changes in electricity usage.