Soaring Energy Costs in Washington, D.C.: How Rising Bills Are Impacting Households
As utility rates climb and infrastructure ages, many D.C. residents, particularly low-income families, are feeling the financial strain of skyrocketing energy costs.
A blog by Kidest Gebre, CCAN’s Communications Manager, & Claire Mills, CCAN Action Fund D.C. Campaigns Manager
Rising utility costs, aging infrastructure, and ambitious climate goals are converging to create a significant energy burden for many D.C. households. These issues are not confined to the District but reflect a broader national trend of rising electricity prices that could pose political challenges as well.
These rising costs are particularly severe for low-income households in the District. Studies show that SNAP-eligible households in D.C. spend more than 20% of their income on energy bills — far above what is considered manageable or affordable. This disproportionate strain is not limited to SNAP recipients. Across the D.C. metro area, 64% of low-income households spend over 6% of their income on energy costs, a level that experts classify as unmanageable. Sadly, 40% of low-income households face a severe financial strain from energy costs, spending more than 10% of their income on energy bills.
But there are ways to address rising costs. The Public Service Commission (PSC), which oversees utilities in D.C. to ensure safe and affordable services, should reject any new fossil fuel projects that would impose additional financial burdens on residents, such as Pepco’s and Washington Gas’s recent proposals to increase bills and the District SAFE, formerly known as Project Pipes pipeline replacement project. You can attend PSC hearings and make your voice heard to stop unnecessary utility bill increases! Check out the end of the blog for details on upcoming community hearings to testify against Washington Gas’s proposed rate increase. RSVP here to let us know you are interested in testifying, receive our testimony guide, and stay up to date.
Pepco’s Price Hikes
In the past year, Pepco, the primary electricity provider for the District, has implemented a series of rate hikes that have left many residents reeling. As of January 1, 2025, Pepco increased its rates for the third consecutive year, with the average D.C. residential customer’s monthly bill jumping 5 percent to $114. This increase is the first under Pepco’s “Climate Ready Pathway DC Multi-Year Plan,” approved by DC’s utility regulator–the Public Service Commission–in November 2024. DC residents and businesses can expect substantial rate increases over the next three years.
A rate case is a formal process where utility companies request to change their prices, and a multi-year rate plan sets prices for several years in advance based on future projected costs. The Commission first approved a pilot multi-year rate plan in 2021 and has now approved a second multi-year rate plan despite growing pushback over the rising electricity costs under the first plan. But as Pepco raises rates yet again, what happens to DC residents?
In 2024, Pepco shut off power to nearly 12,000 customers, and the impact of the July 2024 rate hike is obvious – with shutoffs for nonpayment jumping from 929 in July to 2,456 in August once higher bills came due. Commissioner Richard Beverly dissented from the PSC’s November 2024 decision to approve the multiyear rate plan. He argued that the process of approving Pepco’s rate increase has been poorly managed and unfair to the customers (ratepayers). He expressed concern that the decisions made in this case heavily favor Pepco, rather than protecting consumers’ interests.
A key concern raised by Commissioner Beverly is that when Pepco filed its new rate case in 2023, it was already earning more than expected. This means they were making more money than regulators had originally allowed. Even though this over-earning was identified, Pepco still requested a rate increase. Another issue is the way Pepco’s new multiyear rate plan was set up. Instead of using actual past costs to determine the rates, the proposal relied on projected costs, which are estimates of what the company expects to spend in the future. Projections can sometimes be inaccurate, leading to differences between expected and actual spending.
Without reviewing real costs, there is a risk that Pepco could end up charging customers more than necessary, even if some of its planned expenses didn’t happen or ended up costing less than originally expected. Indeed, this is exactly what happened under the first multiyear rate plan from 2021 to 2023 (see graph below). By relying on projections instead of smart and reasonable costs, the rate-making process risks allowing Pepco to charge customers more than necessary without proper justification for those increased costs.
This graph shows Pepco’s profits or Return on Equity (ROE). The dotted line represents the regulated limit to their profits, which is capped at 9.3%. The blue increasing line shows Pepco making more and more money above what it was supposed to earn. Basically, whenever Pepco made more money than they were allowed, they were charging customers more than they should.
A graph of Pepco’s reported percentage of profits during the Multi-year Rate Plan period, the over earning is across the dotted line. [ A re-visualization of a graph shared by Commissioner Beverly during Pepco’s recent rate case]
These price spikes have not been limited to the District. In neighboring Montgomery County, Maryland, residents have experienced similar shocks on their energy bills. A recent story highlighted the plight of local residents who were stunned by unexpectedly high Pepco bills, with some reporting increases of up to $100 or more compared to previous months. This surge in costs has left many scrambling to adjust their budgets and seeking explanations from the utility company.
Washington Gas and the Financial Impact of District (Un)SAFE
For customers who also pay gas bills, the price hikes continue to pile on. In August 2024, Washington Gas applied to raise gas bills by 12%, generating $33.9 million of additional revenue for the company. This increase would mean the average residential customer would pay about $15.33 more each month. The company also asked for a higher profit limit, meaning Washington Gas will pay out extra returns to their shareholders while residents pay higher bills.
The rate case also includes a weather normalization adjustment. This would add extra charges to customers’ bills from October through May to stabilize bills based on average winter weather. With the adjustment, Washington Gas could make extra money when winters are warmer than expected, rather than simply having customers pay for the gas they use. Meanwhile, with current rates, 1 in 7 DC residents are already behind on their bills and in debt to Washington Gas. In 2024, Washington Gas shut off service to nearly 3,000 customers when they couldn’t catch up on their bills.
To make matters even more complex, we have to also factor in Washington Gas’ proposed “District SAFE” plan, a rebranding of the controversial Project Pipes initiative, to understand the full cost of gas bills. This $215 million plan aims to replace 12 miles of gas lines and address various service line issues. While touted as a necessary response to gas leak concerns, this plan could further exacerbate the financial strain on D.C. residents, potentially adding hundreds of dollars annually to utility bills through surcharges.
The proposed District SAFE plan is likely to significantly increase this financial burden. If regulators approve Washington Gas’s spending requests, customers could face up to $14 billion in cumulative pipeline replacement costs over several decades. This translates to approximately $45,000 per household in D.C. Residents could face additional charges of almost $1,000 annually on top of their regular utility bills. These expenses will be passed down in the form of higher fixed charges on utility bills — fees customers must pay regardless of how much gas they use.
Washington Gas prioritizes replacing pipes over repairing them because it earns higher profit returns — even when less costly repairs would suffice. This approach has led to an over-budget program that tears up streets while failing to target the most dangerous leaks effectively. However, mounting evidence suggests that this spending has failed to significantly improve safety or reduce emissions. Independent neighborhood researchers in 2022 found nearly 400 active methane leaks across the city.
Recent data from Washington Gas highlights several concerning trends for Washington Gas customers, particularly for low-income households, which face a significant burden. An increasing number of low-income households are unable to pay their bills, which could lead to further financial instability for these families and gas service shutoffs. Even a small number of disconnections for low-income households is a serious issue, as losing access to essential utilities can have lasting impacts on health and quality of life. Low-income customers are disproportionately affected by rising utility costs, with a significant percentage falling behind on payments and facing the risk of disconnections.
As D.C. residents grapple with burdensome energy costs, the proposed District SAFE plan threatens to add to their financial strain. While infrastructure upgrades are important, the long-term viability of gas pipelines in light of D.C.’s climate goals raises questions about the wisdom of such massive investments. These investments contradict the District’s environmental objectives and may ultimately burden residents with the costs of soon-to-be-obsolete infrastructure.
Speak Out Against Rising Utility Costs – Your Voice Matters!
These challenges in D.C. highlight the urgent need to rethink how we provide and pay for energy in a way that is fair, affordable, and sustainable. Many families, especially those with lower incomes, are struggling to keep up with rising utility bills caused by outdated systems, expensive upgrades, and climate-related goals.
To ease this burden, the Public Service Commission should reject Washington Gas’s latest rate hike proposal and the District SAFE application. Rather than doubling down on fossil fuels, the Commission should seriously engage in both electric grid and methane gas network planning. A comprehensive plan is necessary to manage the transition to clean energy that is required by District law. If the PSC fails to plan, D.C. residents will continue to pay the price in skyrocketing utility bills.
Want to make sure that this time the Commission rejects yet another utility rate hike, instead of greenlighting it? Testify at upcoming community hearings on Washington Gas’s 12% rate increase:
- WARD 7: Thursday, April 10 from 5:30 to 7:30 pm at Benning (Dorothy I. Height) Neighborhood Library, 3935 Benning Road, NE, Meeting Room
- WARD 4: Monday, April 21, 2025, at Petworth Neighborhood Library, 4200 Kansas Avenue, NW, Meeting Room 1, from 5:00 p.m. to 7:00 p.m.
- WARD 2: Tuesday, April 29, 2025, in the Commission Hearing Room at 1325 G Street, NW, Suite 800, from 6:00 p.m. to 8:00 p.m.
RSVP here to let us know you are interested in testifying, receive our testimony guide, and stay up to date. Then, officially register for a hearing by sending an email to PSC-CommissionSecretary@dc.gov at least three days before the hearing date.
A blog by Kidest Gebre, CCAN’s Communications Manager, & Claire Mills, CCAN Action Fund D.C. Campaigns Manager
