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Straight Talk About Your Electric Bill

Extreme weather = high energy bills

Weather affects most people’s electric bills. For SMECO’s members, the winter of 2026 brought extreme temperatures, leading to more energy use. Southern Maryland saw a lengthy cold spell in January and February, when several inches of snow were followed by a coating of ice, making travel hazardous. In early July 2026, the region experienced high temperatures that topped 100 degrees.

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 May 2026.

Monthly Average Temperatures for 2025-2026

A chart showing average temperatures, January 2025 to May 2026

Heating and cooling are often among the largest parts of a home’s energy bill and can account for nearly half of household energy use.

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

Your heating system may cycle on throughout the day, even when no one is home. In very cold weather, it may run more frequently or for longer periods to meet demand, which increases energy use.

Even when you lower the thermostat to save energy, your heat pump or furnace may run more often because of the colder outdoor temperatures.

  • Energy use often rises more quickly as outdoor temperatures drop, especially during colder weather.
  • Heat pumps use significantly more energy when temperatures drop below freezing because they rely on outdoor air to transfer heat and become less efficient as temperatures fall.
  • Energy use generally increases as outdoor temperatures fall, though the amount varies by equipment type, home efficiency, thermostat setting, and local weather conditions.

Poor insulation and drafty windows make heating systems work harder. As outdoor temperatures drop, more energy is needed to replace heat lost through windows, doors, and poorly insulated walls.

In very cold conditions, some heat pumps rely more on backup electric resistance heat, which is typically much less efficient and more expensive to operate than normal heat-pump operation.

The warmer it gets, the harder your cooling system works

 Your cooling system may also cycle on throughout the day, even when no one is home. In very warm weather, it typically runs more often to maintain a comfortable indoor temperature, increasing energy use.

Even when you raise the thermostat to save energy, your heat pump or air conditioner may still run more frequently because of the warmer outdoor temperatures.

As in winter, poor insulation and drafty windows can make your system run more often as it replaces cooled air lost through windows, doors, and poorly insulated walls.

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.

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 regional energy market

The cost of wholesale power has risen significantly in recent months—as reflected in the PCA. PJM Interconnection (PJM) manages the regional power grid. SMECO actively manages our capacity demand from PJM to the extent we can.

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

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.

Energy rate adjustment

SMECO’s PCA exceeded the 5 percent threshold in March, April, and May 2026, triggering the cooperative to file a request on May 29 to increase its base energy rate. That request also reflected a decrease in the PCA.

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 frigid weather this past winter.

Chart showing Power Cost Adjustment from January to June 2026. From March to May, the PCA was more than %5 above the energy rate for three months in a row, prompting an energy rate adjustment filing

 

Commercial and Industrial Members

GST Rates
Rate class Current Rate ($/kWh) Proposed Rate ($/kWh)
Summer Energy $0.0891 $0.0916
Winter Energy $0.0897 $0.1026
General Service Small
Rate class Current Rate ($/kWh) Proposed Rate ($/kWh)
Summer Energy $0.1026 $0.1150
Winter Energy $0.1018 $0.1218
General Service Medium
Rate class Current Rate ($/kWh) Proposed Rate ($/kWh)
Demand Rate $6.75 $8.97
Summer Energy $0.0730 $0.0817
Winter Energy $0.0734 $0.0903
General Service Large and CCSS
Rate class Current Rate ($/kWh) Proposed Rate ($/kWh)
Demand Rate $8.83 $11.25
Summer Energy $0.0718 $0.0781
Winter Energy $0.0728 $0.0882
Large Power
Rate class Current Rate ($/kWh) Proposed Rate ($/kWh)
Demand Rate $7.77 $9.71
Summer Energy $0.0741 $0.0797
Winter Energy $0.0755 $0.0898
Transmission
Rate class Current Rate ($/kWh) Proposed Rate ($/kWh)
Demand Rate $0.38 $1.83
Summer Energy $0.0458 $0.0693
Winter Energy $0.0404 $0.0917

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) (3/2016–5/2026)

Chart comparing SMECO rate to Consumer Price Index, March 2016 to May 2026

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

How can you save energy and money?

Set your thermostat wisely

  • Winter: Set the thermostat to the lowest comfortable temperature. SMECO recommends 68ºF.
  • Summer: Set it to the highest comfortable temperature. 78ºF is ideal.

Maintain your filter

  • Check the filter every month, especially during heavy-use seasons, and replace it when dirty. At a minimum, replace it every three months.

Keep air flowing properly

  • Inside: Keep vents open and unobstructed. Avoid closing vents unless your system is designed for zoning or an HVAC professional recommends it.
  • Outside: Keep grass, leaves, and debris away from the outdoor unit. In winter, clear snow and ice from around the unit.

Have your HVAC system serviced regularly by a trained service technician. ENERGY STAR recommends a yearly tune-up, or sooner if you notice:

  • Unusual sounds or noises
  • Emergency or auxiliary heat indicator light staying on
  • The unit running constantly in mild weather
  • The outdoor unit remaining iced over
  • No airflow from registers

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.