In Ohio, you not only pay for electricity and delivery, you also pay for “capacity” as part of your electricity generation charges.
In June 2024, the PJM Interconnection, which manages the electric grid for Ohio, held a capacity auction that resulted in pricing 833% higher than the prior year.
The capacity cost increase in Ohio means residential customers will see a 10-15% increase in their bills for June 2025 – May 2026, or around 2 cents per kWh. Businesses can expect an increase of up to 29%.
Here’s the background, and what you can do to keep your bills under control.
What is Capacity?
PJM is responsible for coordinating, controlling and transmitting electricity through Ohio and 12 other states. Capacity is part of the PJM Interconnection market structure.
Capacity fees incentivize development of new generation assets and power plants. They serve as a guarantee that there will be sufficient power when there’s high demand for it, like on hot summer days or winter cold snaps.
Why are Capacity Costs Going Up?
Capacity costs are largely a function of supply and demand.
Demand in the region is driven by population growth, increased data center power usage and more extreme weather patterns.
Supply is constricted by retirement of aging power plants plus a long approval and construction cycle for new generation resources.
How will Capacity Costs Impact 2025-2026 Electric Bills in OH?
The July 2024 PJM capacity auction for 2025-2026 resulted in a bid price that was 833% higher than the 2024-2025 year.
Residential consumers will see a 10-15% increase in their electricity bill.
Business owners will see up to a 29% increase in their electricity bill. Capacity charges account for around a quarter of your business energy costs.
What’s Being Done to Control Costs in the Future?
Pennsylvania Governor Josh Shapiro joined with other government officials to file a lawsuit with federal energy regulators in December 2024. The complaint to the Federal Energy Regulatory Commission (FERC) stated that the auction process itself was flawed.
As a result, PJM has set a new market cap and floor for future auctions. This should result in cost controls for 2026 and 2027 capacity, although it’s unlikely that capacity costs will go back to 2024 levels.
Shop Supplier Fixed Rate Electricity Plans in Ohio
How to Prepare for Higher Electricity Costs
Here are three tips to prepare for higher electricity costs and potentially lower your bill.
Shop for a fixed rate electricity plan from a supplier. Suppliers offer fixed rate plans that can protect you against market changes. When comparing rates, remember that suppliers have already incorporated the new capacity costs in their fixed rate offers. Utilities won’t include the new costs in their rates until June.
Reduce your electricity usage by focusing on home improvements like a a programmable thermostat, weatherizing your home or simply changing your central air filter more often. Our list of 89 ways to save on your electric bill can help get you started.
Lower your usage on the hottest days this summer, and your capacity charges will be lower for 2026-27. Utilities publish a “price to compare” for residential and business customers. However, your individual price to compare varies because of your capacity tag assignment. Think of a capacity tag as how much your meter contributes to the overall peak demand on the grid. Your tag is reset each year based on the 5 highest system usage days each summer.
Ohio opt-out aggregation lets your town or city secure a negotiated rate for all their residents and small businesses. If the rate was set prior to the July 2024 capacity auction you could be impacted by a rate change. Check the terms of service of your contract. You may find a section regarding regulatory changes, which lets them change your rate with 30 days notice. If that occurs, you should start shopping competitive rates to ensure you aren’t over paying.
