The Lansdale Electric Services Building on Ninth Street is seen in summer 2021. Photo by Dan Sokil | The Reporter.
Both communities talk cost increases as 2026 budgets are drafted
With budget season fast approaching and 2026 not far away, two local towns are taking up talks on a nationwide trend.
And growing costs for electricity look likely to have a big impact on the budget picture for both Lansdale and Upper Gwynedd next year.
“This isn’t something that’s new to us. We’re continuously looking at our rates, and our neighboring investor-owned utilities that surround us,” said Lansdale councilman Andrew Carroll.
Electric costs were the subject of talks throughout 2024 as staff and council made the case for an electric rate hike to cover increased electric capacity and transmission costs hitting customers nationwide, plus a need to repair and replace infrastructure and equipment amid supply chain and inflation problems, and to cover a $4.5 million transfer from electric to the general fund in the 2025 borough budget.
Unlike most of the surrounding townships, Lansdale runs a local electric department that maintains and upgrades local infrastructure, and buys electricity wholesale from a regional supplier and then bills local residents and businesses based on their usage.
A rate increase approved in April 2024 was the first time the town has raised its electric rate since late 2014 for 2015, and the first in a series of scheduled increases that added a new “purchase power cost adjustment” meant to cover the increased costs of the power the town buys wholesale, and increases for various meter connection, testing, and equipment usage fees to cover most of the department’s operations.
During the electric committee meeting on Oct. 1, Carroll reported to the full council that the group discussed a first draft of rough numbers for electricity usage for the year about to end, and the upcoming year.
Crane operators and Lansdale Electric workers position a new 59,000-pound transformer onto a concrete pad at the Stony Creek substation in Lansdale in 2014. (MediaNews Group File Photo)“For calendar year 2025, our cost of electricity for us to purchase roughly lands around $9.3 million, including transmission rates and capacity charges,” he said.
“We’re looking, in 2026, at an estimated cost of $12.5 million, so an increase of $3.2 million. These are round numbers; these are not exact, so we know at a minimum, to keep pace with the services we have, we’re looking at a potential $3 million shortfall,” Carroll said.
That $3 million increase does not reflect an increase in usage, but higher transmission and capacity costs for the same usage of electricity, according to Carroll and Electric Superintendent Andy Krauss. An electric rate study meant to update last year’s calculations behind the planned rate increases is currently underway and will likely be completed and presented to council in November.
“We are resigning ourselves that a rate increase is inevitable, but we want to make sure that is a measured approach, that we’re working off of real-time data, and that we always strive to keep Lansdale Electric reliable, and constantly looking at neighboring communities, and we want to always make sure we are under that number,” Carroll said.
One possibility for the 2026 budget: An estimated $1.8 million substation upgrade project could be spread out over two years, with engineering and upfront costs in the first year and the purchase itself in the second year, Carroll said. That expense would likely come from the electric department’s capital reserve fund, and not from any future bond borrowing, per Krauss.
“We want to make sure we are not only a superior product, but also at lower cost. So though rate increases may be coming down the line, they will be commensurate with market changes,” Carroll said.
“That’s not the last time we’re going to discuss that,” he said.
And recent headlines about Governor Josh Shapiro having discussions with electric wholesale supplier PJM about those electric rates statewide have helped the borough, according to Krauss: a lower capacity cap set by the governor helped fix Lansdale’s price for 2026 and ’27.
“The cost of capacity is at an all-time high, so any little bit helps,” Krauss said.
Same talks next door
In adjacent Upper Gwynedd Township, those rising electricity costs were also a topic of discussion this week, as Township Manager Sandra Brookley Zadell previewed an action item up for board approval later this month. That township adopted a five-year contract for its electricity supply that has kept electric rates stable since then, the manager told the township’s commissioners, but it will be back on the table soon, with a decision for the board to make.
“Everyone in the room probably has their own PECO bill that they have noticed go up over the past year,” she said.
“We have benefited from that contract, in that we didn’t really feel the impact of the increased pricing — but now we do, because our contract is at an end,” Zadell said.
Since 2010, Upper Gwynedd has bought electricity for township facilities through the Municipal Utilities Alliance, created by the PA Municipal League of Cities and Municipalities, which provides the benefits of bidding without certain expenses of going through that process, per the manager. Up for board consideration is a proposed new five-year contract, but with a decision for the board to make.
“The board has an opportunity to make a decision about how the electricity is generated. We currently have a 20 percent green energy rate. We’re proposing two options for the board: to go with either a 50 percent green energy or 100 percent green energy,” Zadell said.
“The bad news is, prices are going up 70 percent with this contract, and there is no nice way for me to say that,” she said.
Total township electricity bills usually run $300,000 to $400,000 per year just for the township wastewater plant off of Township Line Road, according to the manager. Choosing the 50 percent green allocation would bring the total cost up to about $414,000 per year by 2030, while the 100 percent green option would raise that number to just shy of $423,000 per year, according to the manager.
“The difference between 50 percent green and 100 percent green is only a three percent cost difference,” she said, and the township’s environmental advisory committee has pushed to go as green as possible.
“It’s something that has been an important initiative the EAC is looking for, and a lot of municipalities have moved to this 100 percent rate,” she said.
Commissioner Rebecca Moodie asked if the increased cost would be included in the township’s annual budget, and Zadell said she and staff have already accounted for the higher price tag in the first draft of their 2026 budget ahead of further board talks.
Exact costs of the forward-looking electricity costs could still fluctuate daily until the contract is finalized, and Zadell said she’ll give the commissioners updated stats as of Oct. 13 when the formal contract is up for approval that night.
“We don’t have the exact rates, because each day they refresh, and the day that I sign the contract is the day that you’ll get the exact rates. But in general, it won’t change too much,” she said.
Upper Gwynedd’s commissioners took no action on that contract during the Oct. 6 meeting, but the manager said a new contract will be up for board approval when that group next meets at 7 p.m. on Oct. 13, at the township administration building, 1 Parkside Place.
Lansdale’s borough council next meets at 7 p.m. on Oct. 15, and the electric committee next meets at 7:30 p.m. on Nov. 5, both at the borough municipal building, 1 Vine Street. For more information, visit www.Lansdale.org
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