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Straight Talk About Your Electric Bill revised

Ice-covered bush in a snowy field

Extreme weather = high energy bills

Weather affects most people’s electric bills. For SMECO’s members, the winter of 2026 has brought extreme temperatures, leading to more energy use.

Southern Maryland saw a lengthy cold spell in January, when several inches of snow were followed by a coating of ice, making travel hazardous. 

  • Ice from Winter Storm Fern lingered as the average daily temperature hovered below freezing (32°F) for close to two weeks
  • The average temperature for January ranged between 17°F and 50°F (not including the wind chill), with an average daily temperature of 33°F

From January 1 through February 10:

  • The minimum temperature was below freezing for 36 out of 41 days.
  • For 17 days, the temperature dropped into the teens and single digits
  • For 12 days, the high did not exceed freezing

When it’s cold in the winter and your heating system runs, or when it’s hot in the summer and your air conditioning runs, your bill will be higher. Your bill is at its lowest in May and October, because you typically use less energy in those months.

The chart below shows the average monthly temperatures from December 2024 through January 2026.

Monthly Average Temperatures for 2024-2026

A chart showing average temperatures, December 2024 to January 2026

The colder it gets, the harder the heating system has to work

A home’s heating system is on 24/7, even when no one is home, and December 2025 and January 2026 were especially cold. Heating systems run almost continuously in very cold weather to keep up with demand, leading to higher usage.

Even if the thermostat is turned down to save energy—the heat pump or furnace runs more frequently because of the cold temperatures.

  • The increase in energy use for colder temperatures is more pronounced when outdoor temperatures fall below 40°F.
  • For systems like heat pumps, energy use increases more significantly when the outside temperatures drop below freezing, because heat pumps rely on outside air to transfer heat, and their efficiency drops as the temperature decreases.
  • Studies suggest that energy use increases by 3 to 5% for every 1°F drop in outdoor temperature, particularly for heat pumps, furnaces, and other heating systems.

For homes with poor insulation or drafty windows, the heating system works even harder. The colder it is outside, the more energy is required to replace heat lost through windows, doors, and poorly insulated walls.

When temperatures are extremely low, many heat pumps switch to less-efficient emergency heat, which can use two to three times more energy than normal operation.

The cost of energy

The residential Standard Offer Service (SOS) energy charge on your bill is the cost of the electricity supply you used in that billing cycle. The cost of energy is a direct, pass-through cost; SMECO doesn’t mark it up in any way as “for-profit” energy suppliers do.

The SOS reflects the price SMECO pays for power on the wholesale market, which is constantly shifting. In an effort to provide greater bill stability, the cooperative bills for the SOS in two parts: the Energy Charge and the Power Cost Adjustment (PCA).

The residential Energy Charge is a flat rate set to cover the cost of energy purchased. This number remains stable on a member’s bill and only changes when certain triggers are met. SMECO’s PCA is a smaller variable rate put into place to both reflect and even out the impact of fluctuating energy prices.

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To ensure the flat base energy rate best reflects the wholesale cost of power to be incurred, SMECO must file with the Public Service Commission to adjust that flat base energy rate if the residential PCA is 5 percent more or less than the residential base rate for three consecutive months. The PCA exceeded the 5 percent threshold in January, February, and March 2025, triggering the cooperative to file a request on March 31 to increase the base energy rate. That request also reflected a decrease in the PCA. The revised charge took effect on June 1.

The regional energy market

The cost of wholesale power has risen significantly in recent months—as reflected in the PCA—and SMECO expects it to continue to increase following a surge in capacity auction prices and a tightening margin between supply and demand.

The “capacity auction” determines what power plant owners in the regional electric grid network will be paid to guarantee they provide enough electricity during extreme temperatures.

PJM Interconnection (PJM) manages the regional power grid. SMECO actively manages our capacity demand from PJM to the extent we can. However, PJM’s 2024 capacity auction for the 2025/2026 delivery year resulted in a significant increase when it cleared at a record-high price of $269.92 per megawatt-day, up from $49.49 per megawatt-day in the previous auction.

Several factors have driven up the cost of wholesale energy in the PJM grid this winter. The cost of fuel for generating power has gone up, and high usage during the cold snap tested the grid’s ability to deliver electricity. Under an emergency alert issued by PJM in late January, power plants that use natural gas were ordered to remain online, and dual-fuel plants could switch to oil if gas were unavailable.

SMECO hedges its purchases of wholesale power, so while the prices that the cooperative pays are less than market rates, they are higher than normal.

The added cost for energy supply will appear on bills over several months starting in March through the Power Cost Adjustment. The increase will be spread out to avoid a single large-bill impact.

Electric bill costs lag behind the rate of inflation

SMECO remains focused on our core commitment to provide affordable and reliable electric service to our members. The chart below provides a good illustration of this focus on affordability, as it shows that the total cost of electric service for an average residential member has increased over the past nine years at a rate that is less than the rate of inflation in the United States.

SMECO Residential Electric Total Bill Costs versus Consumer Price Index (CPI) (3/2016–12/2025)

Chart comparing SMECO rate to Consumer Price Index, March 2016 to December 2025

Pie chart showing Heating/Cooling as half of a customer's energy use, and water heating as one-quarter of the energy use

How your energy dollar is divided

The pie chart shows how much of an energy dollar goes toward heating and cooling as well as water heating: about three-quarters of a typical home’s energy costs.

You can control your energy bills by controlling your heating and cooling costs, along with your water heating costs.

Save Energy

Control your heating costs:

  • Have your heating system serviced annually
  • Clean or replace filters monthly
  • Find the warmest comfortable setting (We recommend 68°F in winter)
  • Install an eligible smart programmable thermostat and participate in the SmartTemp Year Round program
  • Weatherize doors and windows
  • Ensure duct work is sealed and insulated
  • Insulate your attic, walls, and crawlspace

Control your water heating costs:

  • Set your water heater thermostat between 120 to 125 degrees
  • Use cold water whenever possible, such as when washing clothes and only run full loads
  • Insulate your water heater (check manufacturer recommendations)

Time-of-Use Rates

During peak times, energy costs are higher for SMECO, and during off-peak times, costs are lower. On SMECO’s SOS rate, the per-kilowatt-hour cost doesn’t fluctuate. But, for customers who choose SMECO’s Time-of-Use (TOU) rate, energy charges will reflect the peak and off-peak price difference.

TOU rates can help customers save money if they use less energy during peak times. To shift energy use, residential customers can run kitchen and laundry appliances, pool pumps, and other equipment during off-peak hours. Find out more.

How can you budget your bills?

Sign up for SMECO’s Budget Plan to make it easier for you to pay your monthly bills. The plan is a fixed amount that levels out the effect weather has on your electric bills.

Contact SMECO for more information.

Learn how weather affects your electric bill