Philadelphia Commercial Electricity Rates Face Upward Pressure in 2026
Commercial electricity buyers in the Philadelphia (PECO) territory face tightening supply costs in 2026. Driven by the record $333.44/MW-day PJM capacity auction clearing price and systemic baseline grid investments, regional C&I facilities could see total commodity costs increase by 20% to 25% (an added 2.8¢ to 3.2¢ per kWh) for contracts extending into the June 2027 delivery year.
Executive Impact
- →Elevated Basis: Philadelphia\'s dense urban demand combined with PJM capacity constraints creates significant upward pressure on local delivered energy pricing.
- →PECO Distribution Pressures: Ongoing infrastructure investments by PECO are likely to keep distribution and transmission portions of C&I bills steadily rising over the next decade.
- →PLC Management Critical: Facilities in Philadelphia must optimize their Peak Load Contribution (PLC) during the 5 Coincident Peak (5CP) hours to mitigate the coming capacity cost spikes.
The Philadelphia (PECO) Market Context
The Philadelphia metropolitan area, served primarily by PECO (a subsidiary of Exelon), is one of the most dynamic load centers in the PJM Interconnection. As an aggressive "full choice" market, Pennsylvania allows commercial and industrial (C&I) facilities to decouple from PECO\'s default Price to Compare (PTC) and procure generation supply from competitive retail energy providers.
However, navigating the 2026 market presents unique challenges. The underlying fundamentals of the broader PJM grid—namely, retiring thermal generation, surging data center demand, and transmission congestion—are heavily impacting local pricing in Eastern Pennsylvania.
PJM Capacity Spikes Hitting Hard
Capacity costs, which are designed to ensure grid reliability during peak demand periods, represent a growing fraction of a commercial energy bill. The recent PJM 2027/2028 Base Residual Auction cleared at a staggering $333.44/MW-day, building on the record-breaking $329.17/MW-day from the previous year.
For Philadelphia businesses, this translates to tangible supply cost increases. A typical commercial facility with a 50% load factor can expect an estimated 2.8¢ to 3.2¢ per kWh embedded directly into their fixed-price supply contracts extending into mid-2027.
| Cost Component | Historic Average (¢/kWh) | Projected 2027+ Impact |
|---|---|---|
| Wholesale Energy (LMP) | 4.50¢ - 6.50¢ | Moderate Volatility |
| PJM Capacity (RPM) | 1.50¢ - 2.50¢ | +2.80¢ to 3.20¢ |
| Ancillary Services | 0.80¢ - 1.20¢ | Upward Pressure |
*Projections based on general commercial facility load profiles. Actual rates depend on highly customized utility Peak Load Contribution (PLC) metrics. Source: PJM Interconnection data.
Mitigation: The Value of PLC Management
In the PECO territory, a facility\'s capacity cost obligation is directly tied to its Peak Load Contribution (PLC)—a measurement of the facility\'s demand during the five single highest hours of grid stress (5CP) across the entire PJM region during the prior summer.
With capacity prices now representing up to a third of total commodity spend, actively managing demand using curtailment strategies on peak summer days is the most potent lever Philadelphia businesses have to reduce their 2026 and 2027 electricity costs. Facilities that fail to curtail demand during these critical hours will bear the full brunt of the $333.44/MW-day capacity clearance.
Source: U.S. Energy Information Administration (eia.gov), PJM Interconnection.
Assess Your Final Supply Costs
Philadelphia capacity prices will heavily influence your next contract. Run a facility assessment to project your fully-loaded PJM supply rates.