Pennsylvania’s Missing Link in Energy Affordability

By: 2025 Virtual ET1 Fellow June Bethea, CEM | MBA

When Carol Foy opens her monthly electric bill in Philadelphia, she’s worried about what she’ll discover. Her husband needs electricity to power his heart machine, but the cost keeps climbing. Foy recalled a tragic memory: “I had a friend that passed away…because she didn’t want to turn on her heat. She froze to death because she was scared that she couldn’t afford to pay her electric bill.”

This isn’t just a story from decades past. Twenty-four percent of Pennsylvanians struggled to pay their energy bills in 2024, and PECO just raised electric rates by 10 percent this January. One in four low-income Philadelphia households spends nearly 16 percent of their household income just on energy costs.

But there’s a proven solution that Pennsylvania is overlooking: inclusive utility investment programs, commonly known as Pay As You Save® (PAYS®).

A Proven Model Pennsylvania Hasn’t Adopted

Created by the Energy Efficiency Institute, PAYS® programs offer a straightforward deal. Utilities pay upfront for energy efficiency upgrades like insulation, efficient heating systems, or weatherization. Customers then repay the cost through a charge on their utility bill, always less than their energy savings. The charge stays with the property, not the person, so renters benefit too.

A 2024 study shows the majority of participating homes achieve energy reductions of 15 percent for electricity and 26 percent for natural gas, delivering greater cost savings during high-energy-price scenarios.

Yet Pennsylvania, despite having some of the nation’s highest energy burdens, has zero tariffed on-bill programs for residential customers.

A Proven Concept: From Co-ops to Major Utilities

When new approaches face skepticism, someone has to go first. Electric co-ops pioneered PAYS® programs, taking risks large utilities avoided. Co-op successes in multiple states proved the model works.

Their results convinced larger utilities it could work at scale. Duke Energy launched its first PAYS-style program in North Carolina in 2024, proving these programs can scale beyond small cooperatives.

The Deregulation Red Herring

So why doesn’t Pennsylvania have these programs? Some argue Pennsylvania’s deregulated electricity system, in which generation is competitive but distribution remains regulated, creates barriers to utility investment in customer-side improvements.

But two peer states are proving that deregulation isn’t the obstacle.

Illinois operates under nearly identical deregulation, restructuring in 1997, just one year after Pennsylvania. Yet through the 2021 Climate and Equitable Jobs Act, Illinois mandated that all electric utilities offer Equitable Energy Upgrade Programs explicitly modeled after PAYS®. The key insight: these programs attach to regulated distribution service, not competitive generation. Even though you can choose your electricity supplier, you still have one distribution company that owns your meter and sends your bill. The PAYS® charge travels with that meter.

Massachusetts models other pathways forward. Governor Maura Healey’s energy affordability bill would expand access to inclusive utility investment programs statewide. Meanwhile, Ipswich launched its own program in 2023, showing local leadership can pave the way.

Both Illinois and Massachusetts prove the same point: deregulated electricity markets don’t prevent inclusive utility investment. Political will does.

The Financial Reality

We need to be honest about scope. While PAYS® includes safeguards, individual outcomes vary. Berkeley Lab researchers found impacts “are within reasonable expectations,” but acknowledged that variability means not every participant sees costs drop in every period.

Duke Energy’s approach demonstrates how these fit into a broader strategy. While Duke launched its tariffed program for moderate-income customers in 2024, the utility refers severely energy-burdened households to organizations providing free weatherization. Inclusive utility investment programs serve low-to-moderate income households who can afford the monthly charge.

They complement rather than replace direct assistance. Pennsylvania needs both.

Pennsylvania Already Has the Framework

Pennsylvania already has a model that works exactly like PAYS®, but it’s only available for government buildings and is facilitated via contracts with energy service companies rather than utilities.

It’s known as the Guaranteed Energy Savings Act (GESA), which enables state agencies and municipalities to make energy improvements with no upfront costs, paying for upgrades from the savings they generate. It’s budget-neutral and has helped public buildings across Pennsylvania reduce energy waste for years.

Act 129 requires utilities to implement energy efficiency programs and has generated $6.4 billion in customer savings while supporting employment in over 68,000 jobs. The infrastructure is already in place. The regulatory framework exists. It’s just not extended to the residential customers who need them most.

What’s at Stake

If Pennsylvania required utilities to offer these programs, hundreds of thousands of working families could access efficiency upgrades without upfront costs or credit checks, renters could benefit from improvements landlords won’t fund, and the state could create jobs.

Pennsylvania demonstrated it believes in pay-from-savings through GESA and proved it can mandate utility efficiency programs through Act 129. The question is whether Pennsylvania will add this tool to its energy affordability toolkit.

Illinois and Massachusetts are implementing inclusive utility investment in deregulated markets. The data shows it works for working families who can afford modest monthly charges for efficiency upgrades they couldn’t otherwise access.

It’s time for the Pennsylvania Public Utility Commission to convene utilities, consumer advocates, and efficiency experts to design a mandatory program. These programs won’t solve every problem. Families facing the most severe energy burdens will still need direct assistance. But for hundreds of thousands of Pennsylvania families caught between qualifying for assistance and affording upgrades, inclusive utility investment could be transformative.

The solution exists. Pennsylvania just needs to bring it home.

About the Author

*June Bethea is a Clean Energy Leadership Institute Fellow studying inclusive utility investment policy. They hold an MBA and are a Certified Energy Manager based in Philadelphia, Pennsylvania.*