Commercial electric rates in Maryland are climbing fast, and businesses served by PEPCO are feeling the impact. While residential customers are receiving bill credits to help ease the pressure, commercial property owners are largely on their own. As energy bills rise by 12–16% across many commercial rate classes, the need to take control of building energy use has never been more urgent.
Why is this happening now? This shift isn’t driven by a single issue. One of the primary forces behind the increase is the growing demand from artificial intelligence, data center development, and transportation electrification. These sectors require massive amounts of energy and are scaling rapidly in the Mid-Atlantic region, placing new stress on the existing grid and pushing rates higher for everyone.
Here’s what commercial property stakeholders need to know: what’s behind the PEPCO rate increases, how these changes affect your facility’s electricity bill, and what you can do now to reduce long-term exposure.
Supply Rate Hikes Effective June 1, 2025
As of June 1, 2025, PEPCO increased its Standard Offer Service (SOS) electricity supply rates. For commercial customers who use PEPCO’s default supply service, this translated into a sharp bump in generation charges:
- Small commercial rate classes experienced an average increase of 16.1% on supply charges.
- Larger commercial users saw increases of approximately 12.1%, depending on usage profile and rate structure.
This impacts all customers who haven’t locked into a fixed contract with a third-party supplier. If your facility is still on SOS, these increases are already reflected in your monthly electricity bill.
Delivery Charges Have Risen Steadily Over Time
Even customers with competitive supply contracts aren’t insulated from all increases. That’s because delivery and distribution charges, which cover grid infrastructure, poles, transformers, maintenance, and more, have steadily risen for years.
In PEPCO territory, these charges have more than doubled over the last decade. Just a few years ago, delivery rates averaged around 2.6 cents per kilowatt-hour. Now, they’ve climbed to roughly 6.2 cents/kWh, according to data from the Maryland Office of People’s Counsel.
This portion of the bill is regulated, applies to all customers, and has no opt-out. It means that even if your facility uses a fixed-rate supplier, delivery charges will still add to your total electricity costs.
What’s Causing Electricity Bills to Rise?
Multiple forces are pushing rates upward:
Increased Energy Demand from AI and Data Centers
Artificial intelligence and machine learning are highly power-intensive. New data centers are opening across the region to support AI applications, cloud services, and digital infrastructure. Each new facility adds a large and permanent load to the grid.
Electrification of Transportation
The rapid growth in electric vehicle adoption is creating new demand across municipal fleets, delivery services, and consumer use. As charging infrastructure scales up, it requires consistent power supply and increases strain on existing distribution systems.
Retirement of Aging Generation Capacity
Some legacy power plants in the region have been retired due to age or regulatory shifts. Replacing them with cleaner energy sources takes time and capital. During that transition, energy supply tightens, contributing to higher generation prices.
Infrastructure Investments and Compliance Costs
Utilities are also spending more to harden infrastructure, comply with environmental mandates, and modernize the grid. These costs are passed directly to customers through higher delivery rates and service fees.
What This Means for Commercial Properties
Electricity bills are going up, and facilities with no energy plan are especially vulnerable. If your building hasn’t recently undergone energy efficiency upgrades, these rate increases are likely hitting you harder.
Key consequences for commercial and institutional properties include:
- Higher operating costs, cutting into net income or squeezing tenant pass-through arrangements
- Less budget predictability, especially for facilities on variable supply rates
- Competitive disadvantages, especially for properties with high Energy Use Intensity (EUI)
- Difficulty meeting BEPS or ESG requirements, where performance standards are becoming mandato
How to Respond Now
The most effective way to protect your budget is to reduce how much power your facility uses. That starts with understanding your current energy use—and acting quickly on areas with high impact potential.
Conduct a Facility Energy Audit
A detailed audit reveals where and how your facility consumes electricity. HVAC, lighting, plug loads, and envelope performance are all reviewed to identify waste and efficiency opportunities. Audits are the first step in nearly every rebate-backed upgrade.
Prioritize LED Lighting Upgrades
Lighting is one of the most controllable energy loads in any facility. Upgrading to LED systems with smart controls, occupancy sensors, and daylight harvesting often delivers 30–60% savings on lighting energy alone. In many cases, lighting upgrades are eligible for rebates that cover 30–50% of total project costs.
Secure Better Supply Rates
If you’re still on PEPCO’s Standard Offer Service, consider evaluating supply contracts from licensed energy suppliers. Fixed-rate contracts may offer savings and reduce exposure to further SOS hikes. However, this should be done with professional guidance to avoid hidden fees or poorly structured agreements.
Apply for Incentives and Grants
Maryland has several active rebate and incentive programs for commercial buildings. These include lighting rebates from PEPCO, as well as potential funding from organizations like the Montgomery County Green Bank. These programs help offset upgrade costs, reduce ROI timelines, and support long-term performance.
Plan Ahead for BEPS Compliance
The Building Energy Performance Standards (BEPS) adopted in Montgomery County and other jurisdictions will require commercial buildings to meet defined energy performance levels. Failing to act now could mean more expensive compliance later. Planning upgrades today helps you stay ahead of penalties or regulatory enforcement.
Lightility’s Role in Cutting Energy Costs
As a trusted Trade Ally in Maryland utility programs and a lead Technical Assistant to the Montgomery County Green Bank, Lightility helps commercial and institutional customers reduce energy use and stabilize operating costs.
We provide:
- Professional audits tailored to your facility’s usage
- LED lighting design and installation backed by photometric planning
- Controls strategy: sensors, dimming, daylight tracking, and zoning
- Rebate and incentive navigation
- BEPS compliance support, including benchmarking and reporting
- Energy procurement guidance to evaluate supply contract options
Whether you’re managing one facility or a statewide portfolio, we can help you act now—before the next wave of price hikes makes it harder.
What to Tackle First
To get ahead of future rate increases, commercial building stakeholders should:
- Review current electricity bills and identify which charges are increasing
- Commission an energy audit if you haven’t completed one in the last 2–3 years
- Apply for rebates or grants that are currently open (before funding is reduced)
- Plan LED lighting upgrades, especially in common areas, parking, or office zones
- Evaluate your supply contract, and lock in a fixed rate if it makes financial sense
- Start your BEPS compliance plan if your property is covered under local rules
Looking Ahead
These rate increases are unlikely to reverse. Maryland is in a transition period, moving toward clean energy, AI-driven demand, and tighter regulation. Facilities that take action today will benefit from better performance, lower risk, and stronger market positioning.
If you’re not sure where to begin, Lightility is here to help.
Contact us today to schedule a walkthrough or project review. We’ll help you cut energy use, reduce your electricity bill, and build a strategy that works in the face of rising costs.
FAQs
Why are PEPCO rates increasing in Maryland?
Rates are rising due to AI-driven power demand, retiring power plants, and rising grid maintenance costs.
How much have commercial electricity bills gone up?
Many PEPCO commercial customers are seeing 12–16% increases in supply charges, plus higher delivery fees.
Do commercial properties get rebates like residential customers?
No. Residential customers may get credits, but commercial properties must apply for rebates or incentives manually.
What can commercial buildings do to lower their electricity bill?
Audit your energy use, upgrade to LED lighting, and apply for rebates or grants to cut energy costs.
Can Lightility help with PEPCO rebate programs?
Yes. Lightility is a trusted Trade Ally in Maryland and helps businesses qualify for utility incentives and reduce exposure.
Marnie Abramson is at the helm of Lightility, leading the charge in energy conservation solutions. Her visionary leadership has propelled Lightility to the forefront of the industry, specializing in reducing energy costs and enhancing sustainability for businesses. Marnie’s approach to energy conservation combines cutting-edge technology with strategic planning, ensuring clients receive comprehensive and customized solutions. Under her guidance, Lightility is dedicated to helping businesses navigate the complexities of energy management, offering insights into the latest trends, technologies, and practices that drive energy efficiency and environmental responsibility.