Vol76-7 July 2026

SMECO filed for energy rate adjustment on May 29

On May 29, 2026, SMECO filed a request with the Public Service Commission (PSC) to increase the cooperative’s base Standard Offer Service (SOS) rates. SMECO is required to revise its base energy rate when the Power Cost Adjustment (PCA) exceeds 5 percent above or below the base energy rate for three consecutive months. The PCA met that threshold in March, April, and May, triggering the filing.

Under the proposed changes, the residential base SOS rate for summer will increase from $0.1057 to $0.1248 per kilowatt-hour (kWh), and for winter will increase from $0.1060 to $0.1319/kWh. If approved, the new rates will go into effect on August 1, 2026.

Member bills have already seen the impact of higher energy costs through the PCA since March, when it began reflecting the higher-than-expected power generation costs resulting from the extended periods of frigid weather Southern Maryland experienced in early 2026.

SMECO projects annual power costs by forecasting member electricity demand and applying projected market energy prices to meet that demand. These projections are based on historical usage trends, weather assumptions, market forecasts, and pricing data. In just the first two months of 2026, SMECO spent $124.8 million on power supply for members, representing 28 percent of the cooperative’s total power supply costs for all of 2025. January’s energy costs were nearly double projections at $76.2 million, while February costs were 52 percent higher than projected at $48.6 million. The increase was driven by extended periods of very cold weather, which increased demand and led to higher wholesale energy prices when PJM Interconnection activated additional generation requirements to meet the elevated demand. Capacity charges reflect the cost to provide for sufficient generation and transmission capacity. These charges have skyrocketed in the mid-Atlantic region since 2024. SMECO hedges power purchases, so while the increases were less than market rates, they were higher than normal.

SMECO members who receive their electric supply through the cooperative pay exactly what SMECO pays per kWh with no mark-up. The cooperative used short-term debt to cover January’s supply costs and began recovering those costs through the PCA in March. Recovery is spread over several months to lessen the impact to our members.

The PCA is a variable rate that helps manage the impact of fluctuating energy prices. The residential energy charge is a stable flat rate designed to reflect the cost of purchased power, while the PCA adjusts to account for differences between projected and actual costs. When the PCA exceeds 5 percent above or below the base energy rate for three consecutive months, SMECO files to adjust the energy charge, bringing it closer to the actual cost of power and reducing the PCA balance.