Winter Price Spikes: Fixed vs. Index Power in Ohio

Ohio market insight · Weather & resilience

Updated September 27, 2026Ohio Commercial Energy editorial teamHow we review content Book a free 15-min bill review

The short answer

In a severe cold snap, PJM wholesale prices and uplift costs can jump for days, and Ohio businesses feel it in proportion to how much market price exposure their supply contract leaves them. Index and block-and-index customers pay the spike directly; month-to-month variable customers see it in the next price reset; fixed-price customers are largely protected, unless their contract passes through ancillary, uplift or "regulatory" charges or bills usage above a bandwidth at market. Default-service (SSO) customers pay an auction-set price that does not move with a single storm. The time to fix your exposure is before December, not during the alert.

What happens to wholesale power in a PJM cold snap

Two recent events show the pattern:

Winter Storm Elliott (December 23–25, 2022). PJM load reached about 136,000 MW on December 23, roughly 25,000 MW above a typical winter peak, while about 47,000 MW of generation, nearly a quarter of capacity, was on forced outage. Gas-fired units accounted for about 70% of outages. PJM called demand response, issued a public appeal to conserve, and later assessed about $1.8 billion in non-performance charges against generators that failed to deliver.
January 2026 cold and Winter Storm Fern (January 23–February 2, 2026). PJM saw hourly loads of 130 GW or more for eight straight days, generator outages averaging 18–19 GW, and roughly $798 million in uplift costs from January 24 to February 1, driven largely by gas-electric market misalignment and gas supply constraints. The U.S. Department of Energy issued emergency orders, including one authorizing PJM to call on customer-owned backup generation if needed.

PJM's all-time winter peak, about 145,000 MW, was set on January 22, 2025. Cold drives heating load up at the same time it stresses gas supply and generator equipment, which is why winter price risk is sharper than most businesses expect.

Who pays: exposure by product type

Product	How a cold snap reaches your bill	Typical exposure
Default service (SSO)	Price set in advance through competitive auctions; resets on a schedule	Low in the event; winter risk is priced into future auctions
Fixed-price supplier contract	Supplier absorbs energy price spikes	Low, unless pass-through clauses apply
Fixed price with pass-throughs	Ancillary services, uplift or "regulatory change" costs billed separately	Moderate; depends on clause wording
Block-and-index	Fixed block covers part of load; the rest settles at hourly market prices	High on the unhedged share
Full index (real-time or day-ahead)	Every kWh priced at the hourly market	Highest
Month-to-month variable	Supplier can reset the price at the next cycle	Moderate to high, lagged by a month

To compare these products in general, see fixed vs. variable energy rates. For what drives Ohio price volatility beyond weather, see mitigating energy price volatility.

Contract clauses that decide your winter exposure

Pull your contract and check these before December:

Pass-through definitions. Does the price include ancillary services, PJM uplift (balancing operating reserves) and transmission, or are they billed at cost? After the January 2026 event's uplift, this line matters.
Change-in-law or regulatory-event language. Broad clauses can let a supplier bill new PJM charges mid-term.
Bandwidth or swing limits. Some fixed contracts price usage within a band around your expected load; kWh above the band may be billed at market, which is exactly what happens if a cold snap drives up electric heating load.
Expiration date. A contract that ends in December or January can roll into a variable rate in the worst month. For accounts of 25 kW or less, HB 15 requires suppliers to send two notices before a fixed contract rolls to variable (90–60 and 45–15 days before expiration), so do not ignore them; larger accounts must track their own dates. See avoiding energy contract pitfalls.

Preparing an index or variable account before winter

Hedge the winter months. If you prefer index pricing most of the year, fix a block for December through February, or move to fixed-price supply for the season.
Set curtailment triggers in advance. Decide what hourly price (or PJM alert level) triggers shifting or shedding load, who makes the call, and which loads go first.
Watch PJM's operational alerts. Cold Weather Alerts, Maximum Generation alerts and Load Management alerts signal tight conditions and are typically issued ahead of the operating day.
Consider demand response. Enrolling curtailable load through a curtailment service provider can pay you for reducing load during grid emergencies, but it creates an obligation to perform; see how demand response works.
Look at your gas side too. Gas heating customers on interruptible or index gas service face the same weather risk; see natural gas price volatility and your electric bill.

What a cold snap does not change

Your capacity tag. Ohio capacity tags reset each June 1 based on your load during PJM's summer peak hours, so a January spike generally does not raise next year's tag.
Your SSO rate in the moment. Default-service prices are set by auction in advance and do not reprice hour by hour.

What it can change is your monthly billing demand. A cold morning when electric heat, process loads and lighting all start together can set a new kW peak for that month, and some tariffs carry demand ratchets forward. The operating checklist in mitigating cold-snap impact covers how to stagger loads during an event.

The cheapest winter kWh is the one you never buy, so contract protection works best alongside physical preparation: pre-winter efficiency upgrades cut the heating load you are exposed on, freeze protection and heat trace keeps a price event from becoming a property loss, and weather and Ohio energy consumption shows how to use degree-days to estimate how much extra load a cold month adds.

FAQ

Does a fixed-price electricity contract protect my business in a winter price spike?

Mostly. The supplier absorbs energy price spikes, but check whether your contract passes through ancillary services, PJM uplift or regulatory charges, and whether usage above a bandwidth is billed at market prices.

How did Winter Storm Elliott affect Ohio businesses?

Businesses on index or variable pricing were exposed to wholesale price and cost spikes during December 23–25, 2022, when nearly a quarter of PJM generation was on forced outage. Fixed-price customers were largely insulated, depending on their pass-through clauses.

Will a January cold snap raise my capacity tag?

Generally no. Ohio capacity tags are set from load during PJM's summer peak hours and reset each June 1, though a cold morning can still set a higher monthly billing demand.

When should I lock in supply before winter?

Before your contract's expiration notices arrive and ideally by early fall, so an expiring contract does not roll into a variable rate in December or January.