The Borough of Quakertown is one of thirty-five municipalities in Pennsylvania that provide electricity to their community. The Borough has been successful in regulating our electricity rates in this very competitive market, and the majority of the time at a lower rate than our neighboring communities who rely on the investor-owned utilities (IOUs), such as PPL or PECO. The difference between the IOUs and the Borough’s electric utility is that the revenue generated by IOUs goes to their stockholders, however the revenue from the Borough’s electric utility goes towards funding the Borough’s essential services. This results in the lowest property tax rate in Bucks County.

The electric rates consist of four components:

• Electric Generation - The process of creating electricity. 
• Transmission - The cost for the electricity being transmitted across the electric grid from the generation source to Quakertown.
• Distribution - The process of pushing the transmitted electricity from the substation to the residents. 
• Capacity - The total amount of electricity generation available for consumption at any given time.

The current Federal policies regulating electric generation impact the cost of capacity. The EPA has forced the premature retirement of baseload generation provided by coal and natural gas, which provides most of our electricity. Additional policies have been put in place to electrify more of our daily lives. Providing for this increased demand requires massive investment. The demand for electricity exceeds the amount of electricity being generated, substantially increasing the cost of capacity. In other words, demand is growing but the supply is not keeping pace.

Although the Borough secured lower electric generation costs, capacity is out of our control and managed by PJM Interconnection, a regional transmission organization (RTO) in the United States. Their main job is to ensure that electricity flows reliably across a large power grid that serves more than 65 million people in 13 states and Washington, D.C. PJM operates the largest competitive wholesale electricity market in the world and runs regular capacity auctions to decide how much energy will be available in the future and at what cost.

PJM’s most recent capacity auction hit record highs, meaning that electricity prices will go up for everyone in its 13-state area and Washington, D.C. The previous capacity auction cleared at about $2.2 billion. The most recent auction, held in July of 2024, cleared at about $14.7 billion, which is an increase of about 568%!

What does this mean for Quakertown residents?

Given the current Federal energy policies, the Borough has extended our power purchase agreement to secure lower electric generation costs until 2032. 

Every electric provider in the PJM Regional Transmission Organization will be experiencing substantial increases in capacity costs. The Borough is currently exploring ways to minimize the impact of increasing capacity costs. However, given the current capacity market, the Borough is forced to increase electric utility rates by 16% in 2025 and electric rates will possibly continue to increase through 2027.

Please be assured the Borough is taking steps to implement projects that will hedge future utility rate increases such as the Behind-the-Meter Peaking Project and Wastewater Treatment Cogeneration and Biosolids Project. To learn more, visit papublicpower.org/RateHikes 

Please note this will be reflected on the bill that will be due on March 6th, 2025. 

 A full letter explaining these rate changes in detail will be arriving soon in your mailbox.

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