PECO "Price to Compare" Set to Rise 12% in June 2025: Latest Auction Results Explained

The results of the March 2025 PECO default service procurement auction were released on March 26th. This auction completes PECO’s procurement efforts for the June-November 2025 service period, providing visibility into where the default service rate will be set and offering clarity on future rate trends.

For ongoing analysis of PECO electricity rates and supplier offers, visit our dedicated PECO page where we track market data and pricing trends.

How PECO Sets Your “Price to Compare”

Default Service Procurement in a Nutshell

PECO sets its default service rates, also known as the price to compare, through competitive auctions held twice yearly, typically in March and September. In these auctions, power generators, investment banks, and energy traders bid to supply electricity. PECO secures power in stages, buying portions over multiple auctions to reduce market risk. The weighted average price from these auctions becomes the main component of the default service rate for energy supply that customers pay. Unlike other utilities that update rates twice yearly, PECO adjusts rates quarterly, in March, June, September, and December.

Your monthly PECO electricity bill has two main components: supply charges and delivery charges. While delivery charges are set through regulatory processes with the Pennsylvania Public Utility Commission, you have a choice when it comes to supply. You can either stay with PECO’s “default service” rate or choose a competitive supplier.

To set the default service rate, PECO conducts competitive auctions where major players in the electricity market—generation companies, investment banks, and energy traders—bid to supply power. These auctions determine the rate you’ll pay if you stick with PECO’s default service.

PECO’s approach of buying power in stages helps reduce the impact of market volatility on customers. By purchasing portions of their electricity needs across multiple auctions for each service period, they avoid the risk of securing all their power when prices might be at their peak. However, this approach also means that when underlying costs rise sharply—as we’re seeing with capacity prices—these increases will eventually flow through to customers.

Auction Results Breakdown

In this most recent auction, PECO procured:

Procurement Period	% for the Period	Price
June 2025 - May 2026	19.2%	9.712¢/kWh
June 2025 - May 2027	17.6%	9.078¢/kWh

Combined with previous auction results, this establishes a final weighted average price of 8.186¢/kWh for the June-November 2025 service period.

Note about units: The chart below shows prices in $/MWh. For reference, $10/MWh = 1¢/kWh.

The chart above shows PECO’s procurement schedule and weighted average prices across multiple auctions. PECO secures electricity through a series of auctions over time to reduce price volatility for customers.

What Goes Into Your Default Service Rate

The 8.186¢/kWh procurement cost isn’t the final rate customers see. PECO adds several components:

Transmission system costs

PECO’s share of PJM transmission system maintenance and upgrade costs.

Adjustments for distribution losses

Accounting for electricity lost as heat during transmission.

Administrative costs

Expenses for managing the default service program and billing.

State taxes

Various state-level taxes applied to electricity supply.

These additions bring the final default service rate to 10.4¢/kWh.

Energy Wonk Alert! The next sections dive into technical details about capacity markets and auction mechanics. Feel free to skip ahead if you’re mainly interested in the impact on your bill.

The PJM Capacity Auction Connection

These auction results provide a fascinating glimpse into the impact of recent PJM capacity auction results, which resulted in effective capacity prices ~5 times higher for PECO customers than previous auctions.

Typically, PJM holds capacity auctions three years before the service period begins. However, recent delays have disrupted this schedule, creating uncertainty in default service procurement auctions like PECO’s.

The “Capacity Proxy Price” Mechanism

Starting with this most recent auction, PECO implemented a “capacity proxy price” for bidders to use in their pricing models for the June 2026 - May 2027 portion. This mechanism was necessary because, due to the PJM auction delays mentioned above, the actual capacity prices for this period are not yet known. The proxy price is calculated as the average of capacity prices from the two most recent PJM planning years with published results:

PJM Planning Year	Capacity Price
June 2024 - May 2025	$57.36 per MW-day
June 2025 - May 2026	$270.43 per MW-day
Proxy Price (Average)	$163.89 per MW-day

When actual auction costs become known, PECO will adjust the default service rate and ensure auction winners are compensated for any difference between the proxy price and actual price.

Capacity Proxy Price Impact

Our analysis suggests that the June 2025 - May 2027 portion of this recent auction would have settled approximately $5/MWh higher than the published $90.78/MWh if the capacity proxy price had been set at the 2025-2026 level instead of averaging the two periods. This averaging approach likely understates future capacity costs, as a pending FERC settlement would set a minimum capacity price of $175/MW-day for 2026-2027 - higher than the $163.89/MW-day placeholder that’s currently being used in the proxy price calculation.

Evidence of Underestimated Capacity Costs

PECO’s March 2024 procurement is particularly interesting because it included blocks for the June 2025 - May 2026 period before the PJM capacity auction results were known. In that auction, suppliers had to estimate future capacity costs themselves, without any true-up mechanism to protect them if their estimates proved too low:

Procurement Period	Cleared Price
June 2024 - May 2025	6.186¢/kWh
June 2024 - May 2026	7.219¢/kWh

Looking at these two blocks, we can calculate that suppliers were expecting to charge about 8.272¢/kWh for power delivered during June 2025 - May 2026. This was their best guess at what costs would be, including what they thought capacity prices might be.

Fast forward to today’s auction, where the same delivery period is priced 17% higher, now that we know the actual capacity prices. This shows just how much the dramatic increase in capacity costs caught everyone by surprise - even the professional energy traders who do this for a living.

What This Means for You

For PECO Default Service Customers

• Rate Increase: Expect your electricity supply rate to increase about 12% beginning June 1st, 2025
• Bill Impact: For the average household using 700 kWh monthly, this translates to approximately $8 more per month
• Future Outlook: The capacity proxy price mechanism may actually be understating future rate increases

For Electricity Shoppers

• Competitive Advantage: PECO’s previous auction results (before the full capacity price impact was known) will keep default rates artificially lower than current market conditions would suggest
• Shopping Considerations: This creates a challenging environment for competitive suppliers to beat PECO’s default rate in the near term
• Opportunity Window: Consider comparing rates now, as this unusual market dynamic is temporary

The chart below shows current supplier offers for PECO customers. Each point represents a different offer, arranged by contract length (horizontal axis) and price (vertical axis). The dotted green line shows PECO’s current rate (10.4¢/kWh) for comparison.

Key Takeaways

Here’s what you should know about PECO’s latest auction results:

• The PECO default service rate is increasing to 10.4¢/kWh in June
• The dramatic PJM capacity auction results are beginning to impact consumer electricity prices
• Previous PECO auctions that underestimated capacity prices will temporarily benefit default service customers
• This market anomaly creates an interesting dynamic for electricity shoppers to navigate

Want to explore your electricity options before the rate increase takes effect? Check out our dedicated PECO page that tracks supplier offers and other market data.

Note: The estimated bill impacts are general approximations. Your actual bill impact may vary based on your specific rate plan and electricity usage patterns.