Rising PA Utility Rates & Bills – An Independent Fiscal Office Report
On July 27, 2026, the Independent Fiscal Office (IFO) released a report documenting a 14.6% increase in the average cost of electricity in Pennsylvania over the last year. The Report estimated the average monthly electric bill– including all charges and taxes– for the typical Pennsylvania household has increased from $213 in 2024 to $257 in 2026– 20.6%. The Report attributed recent increases for electricity prices as largely driven by higher wholesale energy costs. In a separate analysis of the wholesale cost of electricity based on PJM Monitoring Analytics, the cost of electricity jumped 48.3% in 2025 and further surged 75.5% in the first quarter of 2026 compared to the first quarter of 2025.
Pennsylvania’s Over-Reliance on Only One Fuel Source
The IFO Report found that “the data show that wholesale price increases have been driven by energy and, to a lesser extent, capacity costs.” Previous studies suggest one significant cause of price increases for electricity in PA is an over-reliance on only one fuel source –natural gas, so much so, that 60% of PA’s electricity now comes from gas. PA’s reliance on gas is at the root of the state’s soaring electric bills, experts say, because it means PA consumers must pay more whenever global gas prices go up. Experts also found:
- The national average price of natural gas bought by electric generators in 2025 increased by more than 37%. See PA PEC Electricity Affordability Report Here.
- Energy and Environmental Economics, Inc. found “major contributors to rising electric rates” include the following:
- Natural Gas Price Volatility: Regions reliant on gas-fired generation are particularly exposed to this price volatility.
- Natural Gas Dependency: Electricity prices are sensitive to natural gas prices, so gas-dependent generation states suffer from higher gas costs.
- Less Reliable Fossil Fuel Resources: After Winter Storm Elliott, during which several gas plants failed to perform, PJM deemed fossil fuel plants less reliable.
- PJM – Historically, it has taken PJM eight years to bring new generation online, prompting reforms aimed at streamlining the interconnection process.
- Academic researchers at Columbia University have also concluded that states that are over-reliant on gas as a fuel source run the risk of price spikes for electricity.
New Market Trends, New Grid Models and New Entrepreneurial Solutions
Several other states are taking innovative approaches to address rising electricity rates. Some states have encouraged investors and entrepreneurs to supply new generation from cheaper, faster, reliable sources of electricity. Given a chance to compete, investors are moving quickly to supply electricity from renewable power.
Energy markets have been changing rapidly. In January 2026, the Harvard Business School noted that since the early 2000s, solar panel prices have dropped 85%, and the costs of lithium-ion batteries dropped by nearly 90% from 2010 to 2020. More recently, prices for energy storage/utility scale batteries have fallen by as much as 21% just since May, 2025. These falling prices and other market dynamics have created many opportunities for cheaper, faster & more reliable renewable energy sources to supply electricity without tax subsidies. In fact, Lazard Inc., a private sector investment advisory, reported last month that Renewables Remain the Lowest-Cost New-Build Generation.
The “Base Load” vs. The “Flexible” Models of Electricity Supply
As utility rates continue to rise rapidly in Pennsylvania, and as volatile natural gas prices continue the upward pressure on supply costs, a closer examination of how other states are addressing the affordability, reliability and increased demand challenges for new electricity supplies becomes critical.
In June 2026, Sean O’Leary of the Ohio River Valley Institute released a Report on “West Virginia & the Base Load Model of Grid Management vs. the Flexible Grid.” The Report examines WV’s traditional “base load” model of electricity generation, which depends heavily on one fuel (coal), and has accelerated the state’s electricity affordability crisis. The Report outlines a path (and a rationale) for moving away from the traditional model of large, “base load” electricity resources and adopting a more “flexible” model that delivers power reliably, gets more output from existing infrastructure, and relies more on battery storage, efficiency upgrades, demand response, advanced grid management tools, grid-enhancing technologies, as well as advanced transmission technologies.
The full “Baseload vs. Flexible” Report is Here. For an introduction to some of the economic and technology factors shaping the evolution of a “flexible” grid model, there is also a Four-Page Summary and a One-Page Summary. This Digest will not attempt to summarize all the policy issues presented in the Report. Instead, this Digest will focus on Texas as an example of how a fossil fuel producing state like Pennsylvania might work with entrepreneurs and investors to rapidly scale up cheaper, faster and more reliable renewable energy sources of electricity to keep costs down and meet increasing demand.
Case Study on Reliability, Meeting Electricity Demand & Affordability
The Electric Reliability Council of Texas (ERCOT) manages the flow of electric power to more than 27 million Texas customers. ERCOT is the independent system operator (RTO) for the region (mostly Texas) and is governed by a board of directors, subject to oversight by the Public Utility Commission of Texas and the Texas Legislature. ERCOT is the nation’s second largest RTO after PJM. Texas leads the U.S. in natural gas production, yielding a record-breaking 13.5 trillion cubic feet of natural gas in 2025. By comparison, Pennsylvania (2nd place in the U.S.) produces approximately 7.8 trillion cubic feet of natural gas annually.
Reforms to ERCOT After the Winter Storm in 2021
Texas/ERCOT may seem like a bad candidate for a model RTO. ERCOT was notorious for blackouts that occurred during Winter Storm Uri from February 15-19, 2021. For nearly five days, ERCOT had to shed load, plunging the region into sporadic blackouts and causing over 200 deaths. 19 plants/resources failed across the board, but principally among fossil based thermal resources – gas and coal – which experienced unexpected losses of 16,000 MW, an amount greater than the capacity of West Virginia’s entire coal fleet.
To address the weaknesses exposed by Uri, ERCOT and the state of Texas took a variety of steps. First, the state legislature mandated winterization measures for power plants and natural gas suppliers. Second, ERCOT implemented a Dispatchable Reliability Reserve Service that provides additional, dispatchable power in emergency situations. Third, ERCOT took steps to ensure that fuel suppliers could meet the needs of power plant operators during extreme heat and cold weather. And, finally, ERCOT expanded generating capacity by 40,000 MW, almost entirely from renewable and battery resources. As a result of these changes, Texas has not experienced widespread blackouts since 2021, even as, in 2024, peak loads reached levels that were 15,000 MW greater than those during Winter Storm Uri in 2021. Severe weather events could pose future risks, but Texas deserves some of its Lone Star bragging rights for the successful capacity & reliability reforms.
What Happened in Texas to Boost Clean Energy Generation?
No one is going to accuse the Texas legislature of allowing its climate change concerns to overcome reasonable thinking and impose mandates for the rapid expansion of clean, renewable energy sources to generate electricity. Instead, the reason for the rapid rise of renewables is that the Texas/ERCOT “flexible” model is far more entrepreneurial and employs more market-based incentives than the PJM “base load” model.
The PJM system that serves thirteen states and the District of Columbia allows generators of electricity to be compensated both for the electricity they deliver to the grid, and also, for maintaining capacity to provide energy, regardless of whether (or not) the capacity is used. Also, under certain circumstances, PJM generators are permitted to dispatch energy to the grid and be paid in full even when the electricity supplied is not economical. These practices provide financial cushions to PJM’s electricity generators, while shifting costs and price risk to utility customers. Finally, as noted above, economists have noted that “historically, it has taken PJM eight years to bring new generation online, prompting reforms aimed at streamlining the interconnection process.”
ERCOT, on the other hand, operates an “energy-only” market in which generators are paid only for the electricity they deliver to the grid, which means they must compete on price and bear the risks of insufficient demand and of price fluctuations and troughs to which commodity markets are susceptible.
In this ultra-price competitive environment, renewable energy, battery storage, and ancillary services, including demand response, are ascending and are now displacing natural gas on the ERCOT grid. In 2025 electricity generation in ERCOT climbed by 5.2%. That growth was fueled by a 14.2% increase in wind and solar power. Natural gas generation, on the other hand, declined by almost 3% in 2025.
So, What Does the Current Energy Mix Look Like in Texas?
In 2006, the traditional baseload resources, coal and nuclear, were responsible for 51% of electricity generation in ERCOT and another 46% came from natural gas, leaving just 3% for wind and other resources. But, by 2024 the share commanded by baseload resources (nuclear, coal & gas) had fallen by more than a third, from 97% to just 62%, with wind and solar rising to claim 35% of generation. And, after attaining its highest share ever with 47% in 2019, natural gas’ share fell to 41% in 2025. Given ongoing trends, it is possible that renewables’ share of generation could surpass that of natural gas by the end of 2026.
Renewables Are Replacing Gas and Coal in Texas’ Grid – Data from 1st Quarter of 2026
There is a lot of data to process in this 2006-2026 energy Chart. Note that while Nuclear Power (light green) held more or less constant from 2006 to 2026, Coal (orange) shrunk from 37% to 12%, Natural Gas (light blue) held almost steady with a 39%-47% market share, but Solar (tan) ramped up to 14% in 2025 and Wind (dark blue) increased dramatically to 29% in 2025. But this year, during the first Quarter, wind and solar (with battery storage) supplied 41% of electricity, while gas generators supplied 33%.
Market-Based Innovations to Expand Reliability & Keep Rates Low
The Chart demonstrates that gas may soon be overtaken as Texas’ electricity generation share leader. However, the Chart does not explain why. The ERCOT market-based model is built to take advantage of new technologies and entrepreneurial innovations in a rapidly evolving competitive market. Just one example is the deployment of low-cost batteries. Because of the increasing prevalence of lower cost solar power combined with the proliferation of battery energy storage systems (BESS), new electricity suppliers can compete for and win the right to supply lower cost electricity during peak demand periods.
In 2025, BESS based sources of electricity in Texas expanded at an astonishing rate in ERCOT, growing from 7,800 MW in capacity in 2024 to 13,900 MW. To understand the scale of this change, consider that 13,900 GW is greater than the combined capacity of all the coal-fired power plants in West Virginia. And the change is happening because BESS is a more reliable and less expensive means than natural gas of managing peak demand and providing ancillary services that the grid requires.
Texas Keeps Utility Prices Affordable – Compared to the Rest of the U.S.
After many years of rhetoric in Pennsylvania about the alleged high cost of clean energy sources, Texas is proving that reliable, dispatchable wind, solar and battery-based energy sources can help keep electricity prices low – below national averages.
Renewable Energy is Supplying Expanded Electricity Demands in Texas
In recent years, ERCOT has managed to keep up with growing demand for electricity by greatly expanding wind & solar generation, battery storage capacity, and through demand response, a trend which is expected to continue at least through 2031.
Texas has also experienced higher growth rates than other states for electricity demand from data centers, cryptocurrency mining facilities and other sources.
Recap of the “Base Load” & the “Flexible” Grid Models – Texas Example
The “flexible” grid model does not eliminate baseload power – it uses it more selectively, where it is most cost-effective. In short, the flexible grid is less expensive, cleaner, and easier to scale than grids relying primarily on large, base load resources. With reforms to PJM, Pennsylvania could deploy more renewable energy and accomplish the same goals.
PJM & ERCOT Comparison Chart
The “flexible” grid model delivers power reliably, increases efficiency and productivity, and gets more output from existing infrastructure, avoiding costly new builds. This helps lower overall costs and, ultimately, lower rates. A “flexible” grid can integrate new technologies, with market competition to achieve reliable, low-cost service that is readily scalable.
Advantages of the Flexible Grid Model
