Forecasting Ohio Business Electricity Costs to 2028
Ohio market insight · Bills & budgets
Market-reference note: Numerical default-price examples below retain their cited 2026 reference period. They are historical class-level context, not a current account quote. Confirm the applicable business rate, components and effective dates on your bill before comparing an offer. How to establish your benchmark.
The short answer
Forecast each part of the bill from its own driver instead of applying one inflation rate to the total. Use four inputs:
- your contract price where it's fixed, and a price band for months you haven't bought yet
- capacity at PJM prices that are already set through May 2029, about $120 per kW of capacity tag per year
- delivery charges adjusted for your utility's rate-case calendar
- the kWh tax at its statutory tiers
For scale, EIA's preliminary data put Ohio's average commercial price at about 13.78¢/kWh for January–June 2026, up from about 11.07¢ a year earlier. A budget that simply rolls last year forward will probably come in short.
This page builds a forward forecast. For setting up the annual budget itself, see building an energy budget. For tracking actuals against it, see budget-vs-actual analysis. For the broader market outlook, see the 2026–2028 market forecast.
Why a single inflation rate misses
The bill's components change on different calendars and have moved in different directions:
- Capacity went from $28.92/MW-day in 2024/25 to $329.17 in 2026/27, roughly an 11-fold increase. It changes every June 1.
- Default (SSO) prices reset every June 1. For June 2026–May 2027, small-business general service is about 9.38¢ at Ohio Edison, 9.45¢ at CEI and 9.43¢ at Toledo Edison, and Duke's Rate DM first block is about 11.36¢.
- Delivery moves when rate cases and rider updates take effect. Some fell in 2026 (FirstEnergy's net reduction from March 1; AEP Ohio's net decrease, including a temporary tax refund), while AES Ohio's rose.
- The OVEC rider ended on August 14, 2025, removing one line entirely.
A flat percentage applied to the total blurs all of this. It also hides the one piece you can actually hedge, which is supply.
Inputs you can treat as known
| Input | Value | Good through |
|---|---|---|
| PJM capacity, per kW of tag per year | $120.15 (2026/27), $121.71 (2027/28), $118.63 (2028/29) | May 2029 |
| Your fixed supply contract | Contract ¢/kWh (check whether capacity is included) | Your contract end date |
| SSO benchmark (FirstEnergy GS, Duke DM) | See above | May 2027 |
| kWh excise tax per month | $0.00465 (first 2,000 kWh), $0.00419 (2,001–15,000), $0.00363 (above 15,000) | Until the law changes |
| Ohio renewable portfolio standard | 8.5% in 2026, no requirement after | Supply quotes for 2027 onward shouldn't carry a state RPS cost |
Inputs that are pending
| Input | Status | How to budget it |
|---|---|---|
| SSO prices from June 1, 2027 | Not yet set | Use a band, not a point |
| Duke Energy Ohio rate case | About 3% sought for non-residential, around May 2027 | +3% placeholder from mid-2027 |
| FirstEnergy three-year plan, 2027–2029 | Filed May 2026 | Flat, plus a contingency until decided |
| AES Ohio three-year plan | Filed July 21, 2026, about 1% a year | +1% a year |
| AEP Ohio | Tax refund credit runs 18 months. ESP V ends May 2028. Transmission rider updates yearly. | Remove the refund credit when it ends. Treat transmission as a rising line. |
| Unhedged supply months | Driven by natural gas, weather and load growth | Band anchored to indicative quotes |
| Your own load and capacity tag | Your decisions | Adjust for expansions and summer-peak behavior |
Worked example (illustrative)
Assumptions, for illustration only; replace them with your own:
- 600,000 kWh a year, spread evenly at 50,000 kWh a month, with a capacity tag of 120 kW
- Current fixed supply price of 9.20¢/kWh, capacity included, through the May 2027 meter read
- Renewal from June 2027 assumed at 9.80¢ (base), with a 9.00¢–10.80¢ band. These are assumptions, not a price forecast.
- Delivery (distribution, transmission and other riders, customer charges) of $30,000 over the past 12 months. Year 1 flat, Year 2 +3% as a placeholder for a rate-case increase.
- kWh tax at the statutory tiers: $190.82 a month, or $2,290 a year
| Line | Year 1 (Oct 2026–Sep 2027) | Year 2 (Oct 2027–Sep 2028), base | Year 2 range |
|---|---|---|---|
| Supply | 400,000 kWh × 9.20¢ + 200,000 kWh × 9.80¢ = $56,400 | 600,000 kWh × 9.80¢ = $58,800 | $54,000–$64,800 |
| Delivery | $30,000 | $30,900 | $30,900 |
| kWh tax | $2,290 | $2,290 | $2,290 |
| Total | $88,690 | $91,990 | $87,190–$97,990 |
| All-in ¢/kWh | 14.78¢ | 15.33¢ | 14.53–16.33¢ |
Two checks are worth doing on your own version:
- How much of the renewal price is capacity? 120 kW × $121.71 = $14,605 for 2027/28, or about 2.43¢ of every kWh. That part of a supplier's price is known, not a guess.
- What is the tag worth? Capacity tags reset each June 1 from load during the prior summer's PJM peak hours. Cutting 20 kW during summer 2027's peaks would lower the June 2028–May 2029 tag, worth about 20 × $118.63 = $2,373 that year. You capture it if your contract passes capacity through or re-prices tags. Otherwise it shows up at your next renewal. See the PLC reduction playbook.
Turning the band into a decision
- Budget the base case. Set a contingency equal to the gap between the base and high cases, not an arbitrary percentage.
- If the high case breaks the budget, buy more certainty. Fix the unhedged months or layer purchases in tranches. See fixed vs variable rates and hedging strategies.
- Refresh quarterly. Swap assumptions for known values as they arrive: a signed renewal, the June 2027 SSO, a rate-case order.
- Separate price, volume and demand variance when actuals come in, so a hot summer isn't mistaken for a bad contract.
Utility-specific delivery notes
| Utility | Latest outcome | Budget note for 2027–2028 |
|---|---|---|
| AEP Ohio | April 1, 2026 order: net ~$58.7 million annual revenue decrease, including a ~$105 million tax refund over 18 months. Transmission rider raised from April 2026. New bill format from fall 2026. | Plan for the refund ending and a rising transmission line |
| Duke Energy Ohio | Pending case, about 3% for non-residential, around May 2027 | +3% from mid-2027 |
| AES Ohio | About +$168 million a year from the November 2025 settlement. Three-year plan filed July 2026, about 1% a year. | +1% a year |
| Ohio Edison, CEI, Toledo Edison | Net ~$39.4 million annual reduction from March 1, 2026 (CEI up; Ohio Edison and Toledo Edison down). 2027–2029 plan filed May 2026. | Flat, plus contingency until decided |
FAQ
How should an Ohio business forecast electricity costs for next year?
Forecast supply, capacity, delivery and tax separately. Use known values where they exist (your contract, PJM capacity prices, the tax tiers) and a band for anything unsettled, such as unhedged supply months and pending rate cases.
What electricity costs are already known for 2027 and 2028?
PJM capacity prices through May 2029 (about $120–$122 per kW of tag per year), the kWh tax tiers, any supply you've already contracted, and the end of Ohio's RPS requirement after 2026.
How much contingency should an energy budget carry?
Size it from your own scenario range, meaning the gap between the base and high cases for unhedged supply and pending delivery changes. Don't use a fixed percentage. The more supply you've fixed, the smaller that gap gets.
Does a fixed-price contract make the energy budget certain?
Only the supply portion. Delivery charges, transmission riders and taxes still change with rate cases and rider updates, and usage and demand still vary.