PECO: What's Behind the Rate Hikes and Amazon Deal?

Your Lights Are Getting Pricier: Did Regulators Just Greenlight Amazon's Power Play on Your Dime?

The Federal Energy Regulatory Commission, or FERC, just signed off on a transmission service agreement between PECO Energy and Amazon Data Services. On the surface, it looks like a standard piece of regulatory housekeeping: Amazon needs power for a massive data center in Falls Township, Pennsylvania, and this agreement lays out how they'll contribute to the necessary grid upgrades. But if you dig even a millimeter deeper, past the official pronouncements, you’ll find a rather unsettling picture for anyone paying an electricity bill in Pennsylvania.

My analysis suggests that while the regulators claim to be protecting you, the average ratepayer, the system is designed in a way that makes those protections more theoretical than real. FERC’s decision, handed down just last week, essentially gave the go-ahead, citing something called the "Mobile-Sierra presumption." This doctrine basically says, if two independent parties negotiate a contract freely, FERC should presume it's "just and reasonable" unless it seriously harms the public. Call me a cynic, but that sounds less like rigorous oversight and more like a rubber stamp for corporate agreements, especially when the "public harm" bar seems to be set incredibly high.

The Green Light and the Red Flags

Here’s where it gets interesting, and frankly, a bit concerning. PJM Interconnection’s market monitor, Monitoring Analytics—whose job it is to keep an eye on these things—actually called for an assessment. They wanted to know how Amazon's data center might impact capacity and energy costs for ratepayers, and, crucially, grid reliability. FERC, in its infinite wisdom, rejected that call. Their reasoning? Those issues were "outside the scope of the proceeding." This is the kind of jurisdictional silo Commissioner Judy Chang—who, to her credit, voted to approve but issued a blistering concurring statement—was talking about. It's an almost perfect example of how a narrow regulatory lens can miss the forest for a single tree, or in this case, a single data center.

Chang didn't mince words. She warned that this agreement raises "significant questions" and that FERC needs to work with state utility commissions to ensure customers aren't stuck with "unjustified cost increases related to large load additions." She pointed out that while Mobile-Sierra applies, these are private entities, and their agreement shouldn't automatically be presumed to be in the "best interests of customers." That’s a crucial distinction, one that I've looked at hundreds of these filings, and this particular footnote is unusually direct in its implications. She fears FERC is effectively "outsourcing our customer protection responsibility to bilateral agreements by the utilities we regulate." It’s like trusting the fox to guard the henhouse, then being surprised when the egg count drops.

FERC also stated that this approval "wouldn’t set a precedent" for other transmission service agreements. But let's be realistic here. With over 60 large load tariffs already approved or under consideration by states, according to Chang, this isn't an isolated incident. This is a trend. And if FERC continues to approve these "one-off" deals without a comprehensive framework for assessing customer protections, then every single one of them is a precedent, whether they want to admit it or not. The agency, as Chang correctly identifies, currently lacks a robust framework for assessing these protections. They're reviewing a Department of Energy proposal, sure, but that’s a future fix for a present problem.

The Numbers Don't Lie: Your Bill is Going Up

Now, let's connect this regulatory dance to something far more tangible: your utility bill. Just a day after FERC's approval, news broke that PECO and PPL electricity supply rates are set to increase on December 1, 2025. For PECO customers, that's a 6% hike, bringing the rate to 11 cents per kilowatt hour (to be precise, 11.0 cents/kWh). PPL isn't far behind, jumping 3.7% to nearly 13 cents per kilowatt hour. PECO, PPL electricity supply rates are set to increase on December 1

PECO’s statement on these increases is a masterclass in corporate deflection. They mention "multiple factors" and "sharp increases in the cost of both electricity and natural gas." They point to PJM’s competitive capacity auction, which "drove prices up further due to anticipated challenges with availability of resources to meet rising demand and decreased supply due to power plant retirements." This is a crucial point. The grid is stressed. Demand is rising. Supply is constrained. And right into this environment, we're dropping massive new loads like Amazon’s data center.

Here's my methodological critique: while PECO claims the costs are "passed along directly to customers at exactly the cost that PECO pays," and that the Amazon agreement "protects utility customers from costs related to providing transmission service," the reality of a stressed capacity market means everyone pays more for grid reliability. The transmission security agreement might cover the direct lines to Amazon, but it doesn't insulate the broader grid from the strain of a massive new load. That strain manifests as higher capacity prices in the PJM auction, which then, as PECO themselves admit, "significantly influences electric supply prices." It’s a classic shell game, where the pea—the true cost—is always under the cup you don't expect. How exactly do these "provisions" in the Amazon deal truly shield ratepayers from all downstream costs, especially when the capacity market is already signaling distress? It’s a question that FERC, in its narrow scope, chose not to ask.

The Real Burden of "Protection"

So, what's the bottom line? FERC approved a deal that, by its own admission, didn't fully consider the broader impact on capacity and energy costs. Simultaneously, your electricity rates are climbing, driven in part by a capacity market struggling to meet rising demand. The "protections" cited in the PECO-Amazon agreement feel like a patch on a dam that's already springing leaks elsewhere. The quiet hum of a new data center, powering countless cloud services, will undoubtedly add to the unseen strain on the grid, a strain that will ultimately be reflected in the concrete numbers on your monthly bill. The "Mobile-Sierra presumption" seems to have presumed away the full financial burden on the public.