Utility Monopolies Are Driving Up Your Electric Bill

Across America, public officials allow utility monopolies to pass off the costs of mismanagement, speculative projects, and underutilized infrastructure onto everyday families and small businesses. These companies control the transmission and distribution of electricity from power plants into homes and businesses. While they cite the need for “modernization,” much of this cost surge has less to do with progress than with guaranteed profits. Public officials allow utilities to earn a fixed return on the money they spend to maintain the grid. That creates a perverse incentive: the more they spend—needed or not—the more they earn. And thanks to their monopoly status, ratepayers have no choice but to foot the bill.

Take PPL Electric Utilities, for example, which serves 1.5 million customers in central and eastern Pennsylvania. In a recent earnings report, they shared plans to increase spending next year to more than $1.8 billion on equipment like utility poles, powerlines, and transformers. That’s more than twice what they spent just a couple years ago in 2023. This outlay increases the value of their grid, locking in higher profits for parent company PPL Corporation and its shareholders for years to come with no assurance that the investments will improve service for customers. 

Another serial offender is Exelon Corporation, which operates electric and gas utilities across the Mid-Atlantic and Midwest, such as Atlantic City Electric, Baltimore Gas & Electric (BG&E), Commonwealth Edison, and PECO. 

Exelon promised their wealthy Wall Street investors up to 7% higher earnings annually through 2028 based on more than $38 billion of new spending. It remains unclear whether this mammoth expenditure will appreciably improve grid quality and reliability for customers. Take, for instance, BG&E’s investment of $130 million in a substation intended to support a delayed redevelopment project in Baltimore. Regardless of the project's outcome, the responsibility to cover the costs, along with a profit margin for BG&E, falls on the ratepayers. It’s a profitable business model. Exelon and its subsidiaries delivered nearly $2.5 billion in profit to investors last year—a 52% increase from three years prior.

Utilities like PPL and Exelon have tried to deflect blame by pointing the finger at the rising cost of power generation as opposed to delivery. This is patently false. A study by the Electric Power Supply Association and Energy Tariff Experts directly contradicts this assertion, finding that generation accounts for an average of 45% of the cost of your electric bill. That percentage has remained flat, and in some cases has decreased over the past 10 years when factoring in inflation. Most of the costs on families’ electric bills are driven by distribution costs, state policies, and taxes. 

To support their insatiable appetite for profits, these utilities are now looking for other ways to increase their runaway spending. Remarkably, they are lobbying state legislatures to let them build and own power plants, which would give them unchecked control over the energy system and even more guaranteed profits at working families’ expense.

It doesn’t take much imagination to see where this is headed. These and other monopoly utility operators want the ability to spend billions of dollars to build and operate power plants to boost guaranteed profits for their investors and executives. Wall Street will profit at the expense of millions of ratepayers.

More than a third of Americans say they’ve cut back on essentials to pay their utility bills and nearly 25% are unable to pay their bills at all. What will happen to them when Exelon and other utilities control both ends of the electricity industry? 

Utilities are supposed to work in the public interest. Instead, they’re using their monopoly power to enrich investors while working families struggle. It’s time for America’s leaders to reject utility overreach and protect consumers from another wave of unjustified rate hikes.

The solution to rising power bills isn’t to double down on monopolies. It’s to restore competition, demand transparency, and ensure that every dollar spent meaningfully improves the grid—not just Wall Street’s bottom line.

Chris Cavey is the former Maryland Secretary of Appointments.