Why Philadelphia’s Energy Bills Are Rising—And What the City Can Do About It

As households face their utility bills this spring, many are asking the same question: why are energy costs rising so rapidly?

At a hearing on May 12, 2026, before the Philadelphia City Council Committees on Legislative Oversight and on Transportation and Public Utilities, I offered some answers.

Higher bills are the result of:

1. Surging electricity demand in recent years, which has outstripped supply;
2. Massive utility infrastructure spending; and
3. Federal policies that are constraining new energy supply.

Energy affordability is a topic that is rapidly receiving more national attention—it was a leading issue in gubernatorial elections last year in New Jersey and Virginia and will remain that way in this year’s mid-term elections.

One of the biggest drivers of this issue is the extraordinary growth in electricity demand, particularly from AI and data centers that support it. According to a Lawrence Berkeley National Lab report, data centers consumed 4.4% of all U.S. electricity in 2023, but they are expected to account for as much as 12% by 2028. In the Mid-Atlantic region where Philadelphia is located, this new large load from data centers – as well as from expansion of manufacturing and electrification of buildings and transportation (EVs) – has caused dramatic price increases in the PJM Interconnection wholesale electricity market, increasing costs for households and businesses alike.

In response to this load growth, electric utilities are ramping up their spending on transmission and distribution infrastructure to deliver more electrons to customers, and to harden the grid in response to the increasing frequency of extreme weather events. This increased investment creates significant upward pressure on rates, as utilities earn their profits on these infrastructure investments.

Natural gas customers are facing similar pressures. Even though households are using 21% less gas in Pennsylvania than they were ten years ago, average gas bills are 16% higher as a result of utilities spending billions replacing and expanding pipelines. In Pennsylvania, gas utility assets have nearly tripled over the past decade, from $8.3 billion to $22.6 billion. Continued investment into gas infrastructure maintenance will lead to further rising costs, even as more households switch to more efficient electric heat pumps.

Federal energy policy is exacerbating these issues. The Trump administration has attempted to block new wind projects – both offshore and onshore – and has made both wind and solar projects more expensive by scaling back the tax incentives formerly provided by the Inflation Reduction Act. The Solar For All program – canceled by the Trump administration last August – would have expanded residential solar access for low-income and disadvantages communities, including $156 million for Pennsylvania. At a time when electricity demand is rapidly accelerating, the cheapest sources of new electricity supply are effectively blocked from contributing to the solution

Although many of these forces are national in scope, Philadelphia is not powerless. There are steps that the city can take to address the affordability issue:

1. Bolster opportunities from the Green Bank. The recently created Green Bank (through the Philadelphia Energy Authority) will provide low-cost financing for clean energy projects that will lower customer bills.
2. Promote energy efficiency programs. These programs give customers the tools to manage their energy costs, as well as help bring electricity supply and demand into balance.
3. Get involved in utility rate cases. City involvement in rate cases at the state Public Utility Commission will provide much-needed advocacy for customers.

My message to the Philadelphia City Council was clear—rising energy bills are due to forces largely outside of the City’s control, including the convergence of technological changes, utility investments, and national policy changes. By supporting clean energy, energy efficiency, and smart regulatory engagement, however, Philadelphia can take action to help protect its residents from the growing burden of energy costs.

Jamie Van Nostrand

Senior Fellow

Jamie Van Nostrand is a senior fellow at the Kleinman Center. He is the policy director at the Future of Heat Initiative, a non-profit providing research and assistance to regulators, policymakers, and intervenors to support effective regulation.