Power bills have been skyrocketing
If your electricity bill in Washington, DC feels dramatically higher than it did a year ago, you are not imagining it.
Many DC households have seen total power costs jump close to 40% in a short period of time. What makes this especially frustrating is that for many people, electricity usage has stayed flat or even gone down. Yet the bill keeps climbing.
A common explanation is the rapid growth of data centers in the region. That explanation is not wrong, but it is incomplete. Data centers do play a role, but they are not the primary reason DC residents are seeing such steep increases all at once.
The bigger driver is a series of regulatory and rate-design decisions made over the past two years that shifted more costs onto everyday customers.
The Data Center Factor and Its Limits
Data centers use a massive amount of electricity. Northern Virginia in particular has become a global hub for them, and their growth does put real pressure on the regional grid. Higher demand can lead to higher supply costs and more investment in transmission and infrastructure.
But data centers did not suddenly appear in the past year. Their growth has been steady for a long time. If they were the main cause of today’s rate shock, increases would have been gradual and spread out over several years.
Instead, DC residents saw sharp jumps over a relatively short window. That points to policy decisions, not just market demand.
The Bigger Issue: Deregulation and Cost Shifting
About two years ago, changes were approved in how utilities recover their costs in DC. Those changes made it easier for utilities to pass expenses directly to ratepayers through higher delivery charges, demand-based fees, and guaranteed revenue mechanisms. The new rules went into effect at the start of this year.
In plain terms, more of the utility’s costs became locked in and less dependent on actual usage. That means customers take on more risk, while utilities take on less.
These decisions were approved by the DC Public Service Commission and implemented by Pepco. Since then, many households have noticed a disconnect between how much electricity they use and how much they pay.
This is why conservation alone is no longer enough to protect people from rising bills.
Rate Increases Did Not Start This Year
Since July 2021, DC residents and businesses have faced rate increases from Pepco nearly every year. These increases are not for the cost of electricity itself, although supply prices have risen nationwide. They are primarily for the cost of delivering power to homes and businesses.
That includes maintaining power lines, refreshing infrastructure, and covering utility operating expenses. In other words, customers are paying more simply to receive the same service.
Two multiyear rate increases are largely responsible. The first began in July 2021 and, by the end of 2023, had raised the average Pepco bill by about $5.25 per month. After collecting roughly $108.6 million from that increase, Pepco petitioned for yet another rate hike in 2024.
Despite pushback from industry experts, consumer advocates, and the public, regulators approved an additional $123 million in rate increases for Pepco. That decision will raise the average bill by another $11.34 per month by the end of 2026.
In total, the average household bill will have increased by $16.59 per month, or about $199 per year. In just five years, DC residents are paying roughly $200 more every year to receive the same service from the same company in the same city.
A Recent Example of How These Decisions Hit Your Bill
This is not theoretical. It is already happening.
In December, DC regulators approved new increases to gas and electric delivery charges that will take effect in January 2026. These charges are separate from the cost of energy itself. They are fees for access to the system.
For Washington Gas customers, the change will add roughly $11 per month to an average bill. Pepco customers will see an additional $3 to $4 per month. That Pepco increase follows a $7.54 increase that took effect in January 2025, which was part of a multiyear rate structure approved earlier.
These increases were approved by two commissioners on the DC Public Service Commission, Chairman Emile Thompson and Commissioner Ted Trabue. Both were appointed by Muriel Bowser and are up for reappointment in mid-2026.
Over a relatively short period, these commissioners have approved more than $150 million in combined rate increases for Pepco and Washington Gas, along with additional electricity supply rate increases.
Guaranteed Profits Built Into Your Bill
The commission does more than approve rate hikes. It also determines how much profit utilities are allowed to earn.
For both Pepco and Washington Gas, regulators approved a return on equity close to 10%. That return is effectively guaranteed and baked into customer bills, regardless of efficiency or performance.
Pepco is owned by Exelon, based in Chicago. Washington Gas is owned by AltaGas. DC residents are paying higher monthly bills to support profits for companies headquartered outside the District.
Publicly owned utilities tell a different story. Systems like Austin Energy and Seattle City Light finance infrastructure using tax-exempt municipal bonds at far lower interest rates. Those utilities are designed to serve the public at cost, not to generate guaranteed returns for investors.
Were These Increases Actually Necessary?
Not everyone agreed that these rate hikes were justified.
Independent analysis from Synapse Energy Economics found that Pepco’s proposed spending plan did not meaningfully modernize the electric grid. Many of the projects cited could have been completed using existing funds, without raising rates.
The DC Office of the People’s Counsel reached a similar conclusion, finding little to no public benefit relative to the price tag. Despite these findings, regulators approved the increases anyway, allowing Pepco to spend ratepayer money while guaranteeing near double digit returns to shareholders.
Since then, electricity affordability in DC has continued to deteriorate. Over the past five years, the cost of energy in Washington, DC has increased by more than 90%, the highest increase in the country. During that same period, service quality, reliability, and customer experience have not noticeably improved.
Not Everyone on the Commission Agreed
These decisions were not unanimous.
The third commissioner, Richard Beverly, voted against both the Pepco and Washington Gas increases. In his dissents, he raised concerns about the assumptions used by the utilities and questioned whether the increases were adequately justified.
Those dissents are part of the public record.
Why This Matters
When people say their power bills feel disconnected from their actual usage, this is why.
More of the bill is now fixed, less transparent, and less within a household’s control. Even efficient homes are exposed to rising costs driven by regulatory choices rather than consumption.
Data centers contribute to long-term pressure on the grid, but they are not the main reason DC residents saw such a sharp spike in a single year. The larger cause is how costs and profits are being structured and approved.
These outcomes are the result of policy decisions. And policy decisions can be changed.
