PECO Rates: What's Driving Them & Your Next Bill
Generated Title: PECO's Amazon Deal: A Win for Whom, Exactly?
Okay, so FERC approved PECO's transmission service agreement with Amazon for that data center in Falls Township. Fine. But let's dig into who really benefits, because the press releases aren't exactly screaming the full story.
The Devil's in the Kilowatt-Hour
The core of the issue is this: Amazon needs a lot of power. Data centers are energy hogs, and this one is no exception. PECO gets to upgrade its grid, and Amazon gets the juice it needs. Sounds straightforward, right?
But here's where it gets interesting. PECO customers are already bracing for a 6% increase in electricity supply rates come December 1st, jumping to 11.024 cents per kilowatt-hour. That's the highest PECO has reported in five years. PPL customers aren't faring much better, looking at a 3.7% jump to nearly 13 cents per kWh. And while PECO claims this is due to a multitude of factors, including PJM's capacity auction, let's not kid ourselves – a massive new data center sucking up power doesn't exactly help the situation. PECO, PPL electricity supply rates are set to increase on December 1
FERC's official statement claims the agreement protects utility customers from costs related to providing transmission service to the data center, even if the project falls through. But Commissioner Judy Chang's concurring statement raises a red flag: she warns about "significant questions" regarding customer protections in future cases and the lack of a framework for assessing these protections. This isn't exactly a ringing endorsement.
Chang also points out that FERC might be "outsourcing our customer protection responsibility to bilateral agreements." I've seen this kind of regulatory hand-waving before, and it usually means someone's about to get stuck with the bill.
The "Higher Of" Policy - A Fig Leaf?
FERC's current "higher of" policy aims to shield existing customers from network upgrade costs for generator interconnections. If rolling network upgrade costs into transmission rates would raise the average embedded cost rate, the transmission provider may charge an incremental cost rate for the new service, insulating existing customers from the system upgrade costs. But is this enough?
The problem is that "higher of" only addresses direct network upgrade costs. What about the indirect costs? What about the strain on the existing grid? What about the increased demand that drives up prices for everyone? (These are the questions that keep me up at night, honestly.)
And this is the part of the report that I find genuinely puzzling. If the agreement is so protective of customers, why the need for a "higher of" policy at all? Why not just guarantee that existing customers won't see any rate increases as a result of the data center? The fact that they need this policy suggests there's a risk – a very real risk – that costs will be shifted.
The official line is that factors such as inflation, infrastructure projects, and tariffs are to blame for rising electricity costs. But the proliferation of energy-hungry data centers is also mentioned. It's like blaming the rain for a flood while ignoring the burst dam upstream.
It's also worth pointing out that the Pennsylvania Public Utility Commission is exploring ways to manage the cost for customers, including a model tariff for large load users. The commission issued a tentative order for public comment.
Here's a thought leap: How effective can these proposed measures really be when a single data center can consume as much power as a small city? Are we rearranging deck chairs on the Titanic, or are we actually addressing the underlying problem?
Whose Pocket Is Getting Picked?
The question isn't whether Amazon gets its power. It will. The question is who pays for it? PECO says it's committed to "building and preserving baseload electric generation capacity." Great. But what kind of capacity? Coal? Natural gas? Renewables? And who foots the bill for that infrastructure?
The average American consumer already spends $1,760 on electricity, according to the U.S. Bureau of Labor Statistics. And rates are expected to rise faster than inflation through 2026. How much of that increase can be directly attributed to deals like this one? I don't have the exact number (and PECO isn't exactly volunteering it), but I suspect it's more than they'd like to admit.