The PUC last month approved a plan to allow enrollees in Peco's CAP Rate program to sign up with competitive suppliers, potentially reducing their bills. The plan was to go into effect in April.
The PUC rejected a proposal by Peco and consumer advocates to limit the price to the utility's default rate, the "price-to-compare" paid by customers who don't switch.
The regulatory agency says the law allowing electric choice prohibits it from constraining prices of the suppliers.
The advocates, in their appeal, argue that the PUC has the authority to enact rules to protect low-income customers and to ensure that electric service is available on reasonable terms and that the quality of service does not deteriorate.
The lawsuit was brought by the Coalition for Affordable Utility Services and Energy Efficiency in Pennsylvania; the Tenant Union Representative Network; and Action Alliance of Senior Citizens of Greater Philadelphia.
Leadbetter, one of 11 Commonwealth Court judges, heard arguments last week in Harrisburg and ruled Friday. Her opinion was released Monday.
Without ruling on the merits of the case, Leadbetter said poor customers might be at risk.
"If they are encouraged to shop for generation suppliers in the open market, some of these customers may, by failing to read or perhaps to understand the 'fine print,' select plans with low introductory rates which escalate dramatically after a fixed period, causing them to incur bills which they simply cannot afford," she wrote.
Peco, like all utilities, is required by the state to offer a program for impoverished customers that sets rates according to their income. The discounts range from 23 percent to 93 percent of bills.
The PUC in 2012 asked Peco to devise a plan to give low-income customers the option to choose an alternative supplier.