Watt’s-Up: Why Ohio’s Electricity Capacity Costs Are Rising June 1, 2025

Starting June 1, 2025, many Ohio businesses and households will see higher electricity bills — even if their usage doesn’t increase. Why? One major reason is a sharp rise in capacity costs, a behind-the-scenes charge that ensures the reliability of the electric grid.

Here’s what you need to know:

🔍 What Are Capacity Costs?
Capacity costs are what you pay to make sure enough electricity is available — especially during peak times like summer heat waves. Think of it as reserving backup power in case demand spikes.
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These costs are set by PJM Interconnection, the regional grid operator that manages electricity for Ohio and 12 other states.

📈 Why Are Capacity Prices Going Up?
The big jump is due to the results of PJM’s most recent capacity auction:

• Beginning June 1, 2025 through May 31, 2026, the capacity rate will increase to $270.43 per megawatt per day (MW/day) in all four major Ohio utility areas (First Energy, AEP Ohio, AES Ohio and Duke Energy.)
• This represents a significant increase over the previous year’s price of around $29-$58 MW/day.

​Several factors caused this increase:

• Supply and demand shifts, including rapid growth projected from large data centers looking to locate within the PJM footprint.
• Older power plants are retiring, reducing supply.
• Fewer new plants are entering the market to replace what’s retiring, and when they do they take longer and are more expensive to build.
• Reliability standards are tightening, especially after past winter blackouts.
• Renewables aren’t fully counted as reliable backup due to intermittency.
• Increases from EVs and warmer weather are also contributing factors.

💡 What It Means for You

• Even if your energy use stays the same, 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%. Capacity charges account for around a quarter of your business energy costs.
• Utilities pass capacity charges through in your supply rate.
• If you’re on the Standard Service Offer (SSO) from your utility, you’ll likely see these costs included.
• Some third-party suppliers also pass through capacity charges unless you have a fully fixed rate.

✅ What You Can Do
To protect your business or household:

• Review your current electric plan — Are capacity charges fixed or passed through?
• Compare rates — You may find a supplier offering more favorable terms. A comparison chart of the certified suppliers' offers and information can be found at https://www.energychoice.ohio.gov/ApplestoApples.aspx
• Ask an expert — If your business uses 400,000 kWh or more per year, our expert energy advisors at Palmer Energy can help you understand your options available through our Chamber Energy Solutions member benefit program. Reach out to Emilie Snider at [email protected] or 419-491-1017.