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Pennsylvania's deregulated electric market means you can shop for competitive supply rates — a significant advantage for heat pump owners. But PJM capacity cost surges have pushed rates up ~20% YoY. Here is how to navigate the landscape and optimize your heat pump operating costs.
$0.20/kWh
State Average
All-in residential
$0.17/kWh
Lowest EDC
West Penn Power
$0.21/kWh
Highest EDC
PECO / PPL
+20%
YoY Change
PJM capacity surge
Since 1996, Pennsylvania has allowed retail competition for electricity supply. Your electric bill has two main components — and you can only shop for one of them.
This is the cost of the electricity itself. You can buy supply from your default EDC (at the Price-to-Compare / PTC rate) or from a competitive retail electric provider (REP). The PTC changes every few months based on wholesale market conditions.
PTC rates by EDC: PECO ~$0.11/kWh, PPL ~$0.13/kWh, Duquesne ~$0.124/kWh, Met-Ed ~$0.119/kWh, Penelec ~$0.11/kWh, Penn Power ~$0.119/kWh, West Penn ~$0.103/kWh
This covers the cost of delivering electricity through the local grid to your home. Your EDC (PECO, PPL, etc.) is your distribution company and this portion of the bill is regulated by the PA PUC. You cannot change your distribution company.
Distribution is fixed: Typically $0.07-$0.10/kWh depending on your EDC. Combined with supply, total rates range from $0.17-$0.21/kWh.
Pennsylvania has 7 major electric distribution companies (EDCs). Your location determines your EDC, which affects both your base rate and available heat pump rebates.
| EDC | Total Rate | PTC Rate | HP Rebate | Customers | Service Area |
|---|---|---|---|---|---|
| PECO | $0.21/kWh | $0.110/kWh | $300-$300 | ~1.6M | Southeastern Pennsylvania |
| PPL Electric | $0.21/kWh | $0.130/kWh | $450-$450 | ~1.4M | Central and northeastern Pennsylvania |
| Duquesne Light | $0.20/kWh | $0.124/kWh | $200-$200 | ~600K | Pittsburgh region |
| Met-Ed | $0.19/kWh | $0.119/kWh | $500-$500 | ~560K | Southeastern and south-central Pennsylvania |
| Penelec | $0.18/kWh | $0.110/kWh | $500-$500 | ~590K | Northern and central Pennsylvania |
| Penn Power | $0.19/kWh | $0.119/kWh | $500-$500 | ~160K | Western Pennsylvania |
| West Penn Power | $0.17/kWh | $0.103/kWh | $500-$500 | ~720K | Western and central Pennsylvania |
Rates as of early 2026. PTC rates change quarterly. Total rate includes supply + distribution + surcharges. Actual bills may vary.
PJM Interconnection manages the electric grid for Pennsylvania and 12 other states. In recent capacity market auctions, clearing prices surged dramatically — and those costs are passed directly to PA ratepayers through their EDC bills.
Higher electric rates narrow the savings gap between heat pumps and natural gas. At $0.20/kWh, a COP 2.8 heat pump costs about $860/year for heating. If rates reached $0.25/kWh, that rises to $1,075/year — still less than gas ($1,300) or oil ($2,300), but the margin shrinks.
Mitigation strategy: Shop for competitive supply rates on PA Power Switch. A 2-3 cent reduction in your supply rate can save $150-$250/year on heat pump operating costs.
Shopping for competitive supply can meaningfully reduce your heat pump operating costs. Here is a step-by-step approach for PA heat pump owners.
Check your EDC's current Price-to-Compare on your bill or the PA PUC website. This is the rate to beat when shopping.
Go to papowerswitch.com, enter your ZIP code and EDC. See all available competitive supply offers side-by-side.
For heat pump owners, fixed-rate plans provide cost certainty. Avoid variable rates that can spike during winter when your HP usage is highest.
Typical contracts are 12-24 months. Shorter terms offer flexibility; longer terms lock in rates. Balance based on your outlook.
Some plans charge $50-$200 for early cancellation. Factor this in when comparing offers, especially shorter contracts.
Some REPs offer 100% renewable energy supply at competitive rates. Pair with a heat pump for fully clean home heating.
Time-of-use (TOU) rate plans charge different prices based on when you use electricity. For heat pump owners, this can be an advantage if you can shift some heating to off-peak hours.
11 PM - 7 AM
Lowest rate
Pre-heat your home overnight, let thermal mass carry through morning. Program thermostat to raise temp 2-3°F before peak starts.
7 AM - 2 PM, 7 PM - 11 PM
Standard rate
Normal heat pump operation. Most of your heating hours will fall here during winter shoulder months.
2 PM - 7 PM
Highest rate
Reduce HP usage if possible. For hybrid systems, this is when gas backup may be more cost-effective.
TOU plans are available from some competitive suppliers on PA Power Switch, but they are not universally offered by all EDCs as a default option. Check papowerswitch.com for TOU-specific offers in your territory. Some smart thermostats (Ecobee, Nest) can integrate with TOU schedules to automatically optimize heat pump operation.
Your electricity rate is the single biggest variable in heat pump operating costs. Here is how different rate scenarios affect annual heating costs for a typical PA home.
| Rate Scenario | $/kWh | HP Annual Cost (COP 2.8) | vs Gas ($1,300) | vs Oil ($2,300) |
|---|---|---|---|---|
| Best competitive rate | $0.16 | $688/yr | Save $612/yr | Save $1,612/yr |
| West Penn Power default | $0.17 | $731/yr | Save $569/yr | Save $1,569/yr |
| PA statewide average | $0.20 | $860/yr | Save $440/yr | Save $1,440/yr |
| PECO / PPL default | $0.21 | $903/yr | Save $397/yr | Save $1,397/yr |
| If rates rise further | $0.25 | $1,075/yr | Save $225/yr | Save $1,225/yr |
Based on 55M BTU/year heating load (typical 2,000 sq ft PA home). COP 2.8 seasonal average for Zone 5A cold-climate model. Gas at $1.60/therm, 92% furnace. Oil at $3.40/gal, 85% boiler.
Yes, Pennsylvania has a deregulated electricity market. This means the supply (generation) portion of your bill can be purchased from competitive retail electric providers (REPs), while your local EDC (PECO, PPL, Duquesne, etc.) continues to handle distribution. You can shop for supply rates on PA Power Switch (papowerswitch.com) while remaining a customer of your local EDC for delivery.
The statewide average residential electric rate in PA is approximately $0.20/kWh as of early 2026. Rates vary by EDC: PECO ~$0.21/kWh, PPL ~$0.21/kWh, Duquesne ~$0.20/kWh, Met-Ed ~$0.19/kWh, Penelec ~$0.18/kWh, Penn Power ~$0.19/kWh, and West Penn Power ~$0.17/kWh. Rates have increased approximately 20% year-over-year due to PJM capacity cost surges.
PA rates surged primarily due to PJM Interconnection capacity market auctions. PJM is the regional transmission organization that manages the grid for PA and surrounding states. Capacity costs — paid to ensure enough power plants are available — have increased dramatically, driving up the generation portion of PA electric bills. This impacts all 7 EDCs.
Use PA Power Switch (papowerswitch.com), the official PUC comparison tool. Enter your ZIP code and EDC to see available competitive supply offers. Look for fixed-rate plans (avoid variable), compare price per kWh, check contract length (12-24 months typical), review early termination fees, and confirm it includes 100% renewable if that matters to you.
Absolutely. Your electricity rate is the single biggest factor in heat pump operating costs. At PA average $0.20/kWh with COP 2.8, annual heating costs are about $860. If you shop for a competitive supply rate of $0.16/kWh, that drops to about $690 — saving $170/year. Conversely, if rates rise to $0.25/kWh, costs increase to about $1,075. Always factor your actual rate into savings calculations.
Time-of-use (TOU) rate plans are available from some competitive suppliers in PA, though they are less common than in states like California. TOU plans offer lower rates during off-peak hours (typically overnight) when heat pumps can run more efficiently. If available in your EDC territory, a TOU plan with overnight heating could reduce your heat pump operating costs.
Get a personalized analysis of heat pump savings based on your PA utility territory, current fuel type, and actual electric rate.