The Philadelphia Electric Company was incorporated under the laws of Pennsylvania on October 31, 1929, as a merger of The Philadelphia Electric Company (incorporated in Pa. on October 27, 1902), the Philadelphia Suburban-Counties Gas & Electric Company, and three other small utility companies. It is the primary gas and electric company for Philadelphia, its surrounding counties and Cecil and Harford Counties in northeastern Maryland.

After the invention of electric lighting systems in the late 1870s, several companies were formed in Philadelphia. The first was the Brush Electric Light Company of Philadelphia, formed by Thomas Dolan and others for the purpose of lighting Chestnut Street in March 1881 and utilizing the Brush arc light system. The Maxim Electric Light & Power Company was formed in September 1881 by Martin Maloney, William L. Elkins, Peter A. B. Widener, William G. Warden and others to use the systems invented by Hiram S. Maxim and Edward Weston. It was soon named the United States Electric Lighting Company of Philadelphia and set up isolated plants to provide electricity to specific buildings. In 1885 the "Electric Trust" was formed for the purpose of consolidating the Brush and United States companies, and over the next ten years the Trust began to acquire some twenty small companies organized to serve specific areas of Philadelphia County.

The Edison Electric Light Company of Philadelphia was organized in December 1886 by Samuel B. Huey and William D. Marks with the backing of the Edison Electric Light Company of New York. The company used the Edison system and constructed what was then the largest central generating station in the world in 1889. By 1895 the Edison company was the largest and most profitable electric company in the city.

Martin Maloney organized the Pennsylvania Heat, Light & Power Company in February 1895 to promote the Siemens system. In 1896 it acquired the stock of the Edison company and then purchased the Electric Trust. In February 1898 Maloney organized the Pennsylvania Heat, Light & Power Company and proceeded to buy up the remaining independents. Another holding company, the National Electric Company, was formed in May 1899 and began buying utility companies in Philadelphia and Delaware Counties.

The Philadelphia Electric Company was incorporated under the laws of New Jersey on October 5, 1899, for the purpose of merging the National and and Pennsylvania Manufacturing, Light & Power Companies. In 1901 it acquired the Kensington Electric Company, the last independent in the city. A separate "The Philadelphia Electric Company" was incorporated in Pennsylvania on October 27, 1902, to act as a single operating subsidiary. Under the presidency of Joseph B. McCall (1870-1926) it imposed uniformity on the patchwork quilt of local companies and introduced the alternating current system. It also arranged to supply power to the Philadelphia Rapid Transit Company, operating the city's streetcars and subways, and the Pennsylvania Railroad electrification​s beginning in 1913.

In 1911 the reform mayor Rudolph L. Blankenberg appointed Morris Llewellyn Cooke as Director of Public Works. Cooke, a Progressive advocate of public ownership of utilities, began a campaign against Philadelphia Electric. Partly as a result, the New Jersey corporation was dissolved on November 19, 1917, and The Philadelphia Electric Company became the parent firm. Large central stations were built at Chester (1918), on the Delaware River near Penn Treaty Park (1920) and Richmond (1925).

In 1923 the company's bankers, Drexel & Co., purchased the Susquehanna Power Company of Maryland, which had acquired rights to build a hydroelectric dam on the Susquehanna River at Conowingo. It was turned over to the Philadelphia Electric Power Company, a Philadelphia Electric subsidiary, and the dam was completed in 1928. In 1927, Philadelphia Electric formed the Susquehanna Utilities Company to operate six local electric companies in southeastern Pennsylvania and northeastern Maryland associated with the Conowingo project. The Philadelphia Electric Company, Pennsylvania Power & Light and the Public Service Electric & Gas Company of New Jersey formed the first interconnected power grid in 1928-1931.

Under McCall, Philadelphia Electric made no attempt to expand beyond its original service area. In 1928, after McCall's death, control of the company passed to the United Gas Improvement Company, a Philadelphia-based national utility holding company long associated with Philadelphia Electric. UGI also controlled a number of gas and electric companies serving the northern and western suburbs which had been consolidated into the Philadelphia Suburban-Counties Gas & Electric Company. Philadelphia Suburban-Counties were merged into Philadelphia Electric in 1929. Under orders from the SEC, United Gas Improvment Company divested itself of Philadelphia Electric in 1941.