Blend-and-Extend: Renegotiating Ohio Power Contracts
Ohio market insight · Buying & contracts
The short answer
A blend-and-extend lowers the price on the rest of an above-market contract by making the contract longer. The supplier averages your current price with a price for the added months. The loss built into your old price doesn't go away; it gets spread over a longer commitment. That helps when you'd stay with the supplier anyway and want budget relief now. It hurts when the extension price carries margin you can't see, or when the new end date runs past a change in your business. Other mid-term changes, such as adding sites, resizing bandwidth, or fixing a capacity pass-through, are usually easier to win.
This page covers renegotiating with your current supplier. For the math on paying a termination fee and moving to a different supplier, see switching mid-contract. For negotiating a new contract, see the negotiation playbook and terms to negotiate.
Why suppliers offer a blend
When you signed, the supplier hedged power for your full term at the prices of that day. If forward prices have since fallen, your contract is worth more to the supplier than a new contract at today's prices would be. It won't give that value up, but it would rather keep you as a customer than have you leave and pay a termination fee. A blend lets it do both. You get a lower price now, and the supplier gets a longer contract that recovers the difference.
Worked example (illustrative)
Assumptions, for illustration only:
- 10 months remain at 10.2¢/kWh, at 40,000 kWh a month (400,000 kWh)
- Today's forward price for those same 10 months is 9.0¢
- The supplier offers a 24-month extension at 9.0¢ (960,000 kWh)
| kWh | Price | Cost | |
|---|---|---|---|
| Remaining term, unchanged | 400,000 | 10.2¢ | $40,800 |
| Extension, priced today | 960,000 | 9.0¢ | $86,400 |
| Blended over 34 months | 1,360,000 | 9.35¢ | $127,200 |
The blended price is $127,200 ÷ 1,360,000 kWh, or about 9.35¢. You pay 9.35¢ for 34 months instead of 10.2¢ for 10 months and then 9.0¢ for 24. The total is the same $127,200. The above-market cost of the remaining months (400,000 kWh × 1.2¢ = $4,800) hasn't gone away; it's spread out at about 0.35¢/kWh across the longer term.
This example assumes the extension is priced at market. If independent quotes for the same 24 months come in at 8.8¢, a 9.0¢ extension carries an extra 0.2¢ × 960,000 = $1,920 of margin. That margin is why you should benchmark the extension price before accepting a blend.
When a blend helps and when it hurts
| Helps when… | Hurts when… |
|---|---|
| You'd renew with this supplier anyway, because service and billing have been good | The extension price is above independent quotes for the same months |
| Budget relief this year matters more than total cost | The site may close, move or change its load significantly during the new term |
| The new end date fits your lease and business plans | You give up a competitive bid at what would have been your renewal |
| The supplier shows its math: remaining price, extension price, blended price | The extension runs into months with unknown costs, such as capacity after May 2029 |
| You fix old contract problems (pass-throughs, bandwidth) at the same time | Prices keep falling, and you've committed more months at today's level |
Compare the alternatives on the same day
| Option | What happens to the above-market cost | Best when |
|---|---|---|
| Ride out the contract, then rebid | You pay it over the remaining months, then get full competition at renewal | Little time is left on the contract |
| Blend-and-extend | Spread across a longer term with the same supplier | You want relief now and would stay with this supplier |
| Forward-start contract | Unchanged. You sign now, with any supplier, for a term that begins when the current one ends. | You like today's forward prices for the next term but don't want to pay a fee |
| Terminate and switch | Usually charged up front through a mark-to-market termination fee | The fee is fixed or capped below your savings |
The last row matters. When a termination fee is calculated as mark-to-market, the fee is roughly the same $4,800 above-market cost from the example. So terminating and blending often cost about the same in total. What differs is who you buy from, when you pay, and how long you're committed. The switching article works through that math in detail.
Other mid-term renegotiations worth asking for
A blend isn't the only thing you can change mid-term. These requests are usually easier to win:
- Add or remove sites. Ask for new locations at the contract price or at a stated formula, and for a defined process for closed sites. Don't leave it to the supplier's "sole discretion."
- Resize bandwidth. If you're adding a shift, installing solar or finishing an efficiency project, renegotiate the usage band before the change instead of paying out-of-band charges afterward.
- Convert a capacity pass-through to fixed. PJM capacity prices are now set through May 2029 ($329.17, $333.44 and $325.00/MW-day for the next three delivery years), so a supplier can price a conversion from known numbers. This makes sense if you won't be managing your capacity tag.
- Fix the renewal clause. Replace a rollover to a month-to-month variable price with a rollover to a stated fixed price, or with expiration to the utility default. Small commercial customers (demand of 25 kW or less) get HB 15 renewal notices (90–60 and 45–15 days before the end), but those notices don't change the renewal price.
- Tidy up assignment and notice terms. Ask for notice or consent rights before the supplier can assign the contract.
For clauses to look for, see red-flag contract clauses. For definitions, see the contract terms glossary.
How to negotiate a blend
- Get the math in writing. Ask for the remaining volume, remaining price, extension volume, extension price and resulting blended price.
- Benchmark the extension. Get two or three outside indicative quotes for the same start date and term. That's the only way to see the margin.
- Price several extension lengths. Ask for 12 and 24 months side by side. A longer extension dilutes the old price further but increases your commitment.
- Carry over nothing by default. Treat the blend as a new contract, and re-read capacity treatment, pass-throughs, bandwidth and early-termination terms.
- Pick the new end date deliberately. Ending just before a June 1 lines your next renewal up with the reset of default prices and capacity tags. Then put that date on the calendar.
FAQ
What is a blend-and-extend electricity contract?
It's an amendment in which your supplier lowers your current price by averaging it with a price for added months, which extends the contract. The above-market part of the old price is spread over the longer term rather than removed.
Does blend-and-extend save money?
Not in total if the extension is priced at market. It shifts cost from now to later. It only saves money if the extension price is below what you'd otherwise pay, so benchmark it against independent quotes.
Can I renegotiate my Ohio electricity contract before it ends?
Yes, if the supplier agrees. Common changes are blend-and-extend, adding or removing sites, adjusting bandwidth, and converting a capacity pass-through to a fixed price.
Is blend-and-extend better than paying the termination fee?
Often the total cost is similar, because many termination fees are calculated as mark-to-market. The choice comes down to cash flow, whether you want to stay with the supplier, and whether a competitor's price for the next term beats the extension price.