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Peppers are slow growers but part of your problem would appear to be overly wet soil and pots - which peppers don't like. The peat/cow pots are notorious for moisture control problems at best and peppers prefer to dry out a bit between waterings.

Overly wet soil causes the roots to have difficulty - slow growth, root rot, lack of sufficient air, poor drainage, etc. are all issues that can arise. Try cutting back on the watering and see if they don't perk up quite a bit.

Also with T8 lights - get the plants closer. Just a 1/2" hair above the top of the plants. 2" is definitely too high.

Hope this helps.

Dave

Thanks for your help! I will definitely try that.