At UGI Energy Services, we always strive to provide information to our customers in the most transparent way possible. Energy can be a complicated topic and sometimes difficult to distinguish the facts from various news articles, publications, and word of mouth. In this article, we will provide some context in regards to the recent Pennsylvania Electricity Update from the Independent Fiscal Office (IFO).

In the recent update from the IFO, they focus on regional electricity price market trends in Pennsylvania. This summary shows PA with higher residential electricity prices than neighboring states and other PJM states. The IFO suggests the reason consumer electric bills have risen is solely due to the reliance on natural gas as the primary generation source. To provide additional context, the Marcellus Shale Coalition has analyzed the IFO update and addresses several important points that disconnect with the IFO’s findings.

Per the MSC’s review, “The IFO does not provide any detailed analysis of this trend or cost factors influencing residential prices, other than observing that the significant price increase was “largely due to natural gas prices.” No rationale is offered to substantiate this conclusion other than passing references to spot market prices increasing from 2020 to 2022. Given this lack of context or analysis, the MSC offers the following as additional points for consideration when reviewing the IFO’s update.

• “The IFO states that because a higher percentage of electricity generated within PA is from natural gas, electricity prices within PA are more susceptible to natural gas price increases
  • This is not true. The electricity generated within PA is sold into the broader PJM grid, and the electricity purchased by utilities is purchased from the broader PJM grid. PA utilities are required by state law to purchase electricity that, as determined by the PA PUC, is “the least cost to customers over time.”

• “The IFO’s comparison of spot prices from 2020 and 2022 is misleading, particularly when overlayed upon an analysis that ostensibly is examining trends from 2018 – 2025.
  • 2020 saw a NYMEX average price of $2.08/MCF, while PA saw an average price of $1.34/MCF
  • 2022 saw a NYMEX average price of $6.65/MCF, while the PA average price was $5.57/MCF
  • These price point years are anomalies:
    • 2020 prices were impacted by the global pandemic
    • 2022 prices were impacted by the Russian invasion of Ukraine

• “There is no rationale for the IFO to blame a temporary increase in natural gas prices in 2022 for electricity prices in 2025 and then ignore subsequent price points in the following three years.
  • Recent average PA prices:
    • 2018 $2.47/MCF
    • 2024 $1.65/MCF
    • 2025 $2.63/MCF

• “Contrary to the narrative of the IFO Update, natural gas prices in recent years in PA are on par (or below) with 2018 prices and have helped to mitigate – not increase – overall electricity prices.

• “Additionally, the IFO’s update combines generation and transmission costs for comparisons with the rise in distribution costs.
  • This is misleading. Natural gas and other fuel sources impact generation costs. Any fair comparison would examine generation vs transmission vs distribution costs.
  • Including transmission costs in this price comparison inaccurately assigns responsibility for transmission prices to fuel costs. That’s like blaming the cost of an automobile on the price of gasoline.

• “The IFO does recognize the cost of state mandates under the Alternative Energy Portfolio Standards Act (AEPS) but downplays this significant factor.
  • In 2018, consumers paid $101.4 Million to comply with the AEPS mandates.
  • In 2024, consumers paid $702 Million
  • In 2025, consumers paid another $702 Million
  • All told, since 2018 consumes have paid nearly $3 Billion in subsidies for AEPS sources; nearly half of that ($1.4 Billion) just over the past two years.

• “When examining impacts to PA consumers from 2011 – 2024, it is clear that Pennsylvanians are benefitting from natural gas electric generation:
  • Generation costs over this time period, as reported by PA utilities, are down 16% adjusting for inflation
  • All other costs of a consumer’s bill, including transmission, distribution and AEPS compliance costs, are up 25% adjusting for inflation.
  • Read more HERE for a detailed analysis.”

We hope this provides some perspective regarding the recent update from the IFO. If you have any questions or would like more information, please contact us at https://ugies.com/contact-ugies/.