Ohio Commercial Energy

Powered by Jaken Energy · 833-264-7776

Grid Equipment Tariffs and Ohio Delivery Rates

Ohio market insight · Rates & regulation

Updated Ohio Commercial Energy editorial teamHow we review contentBook a free 15-min bill review

The short answer

Ohio utilities buy large amounts of transformers, switchgear, cable and other steel- and copper-heavy equipment. Since 2025, 50% Section 232 tariffs on steel, aluminum and copper content, on top of an existing transformer shortage, have raised what that equipment costs. Utilities recover equipment spending through their rate base, earning a return and recovering depreciation over decades, so higher prices reach delivery rates gradually, through rate cases and transmission formula updates, not overnight. For a business, the bigger effects are the size of utilities' 2027–2029 capital plans and longer waits for your own service upgrades.

What happened to grid equipment prices and lead times

The pressure started before the 2025 tariffs and has several causes: post-pandemic demand, grid replacement, new large loads, and a thin supply of electrical steel.

Indicator What the data show
Distribution transformer prices Up roughly 40% in inflation-adjusted terms from 2020 to 2024 (BLS data cited by the Congressional Research Service)
Distribution transformer lead times About two years in 2024, four times the pre-2022 norm; down to about 30 weeks by mid-2025
Power transformer lead times Averaged about 128 weeks in the second quarter of 2025 (Wood Mackenzie data reported by POWER)
Price change since 2019 Power transformers up about 77%; distribution transformers up as much as 95% (Wood Mackenzie data reported by POWER)
2025 supply shortfall About 30% for power transformers and 10% for distribution transformers (Wood Mackenzie)
Import reliance About 80% of U.S. power transformer supply and 50% of distribution transformer supply come from imports (Wood Mackenzie); 25–30% of finished distribution transformers and half to three-quarters of their cores are imported (CRS)

Electrical steel is the pinch point. About 95% of U.S. transformer cores use grain-oriented electrical steel, and Cleveland-Cliffs is the only domestic producer. Manufacturers have announced close to $1.8 billion in new North American transformer capacity since 2023, but several of the larger plants are not scheduled to start production until 2027.

Which tariffs apply now

Trade policy has changed several times since early 2025. As of late September 2026:

Measure What it covers Status
Section 232, steel and aluminum 50% on steel and aluminum content; the derivative list expanded in August 2025 to include transformer cores and laminations and certain dry-type and control transformers In effect
Section 232, copper 50% on certain semi-finished copper products, including those used in transformer windings (from Aug. 1, 2025) In effect
IEEPA tariffs Broad country-based tariffs, including the "reciprocal" tariffs Struck down by the Supreme Court on Feb. 20, 2026
Section 122 surcharge 10% temporary surcharge, Feb. 24–July 24, 2026 Expired
Section 301 (forced-labor enforcement) 10–12.5% on imports from 60 economies; goods already under Section 232 are excluded In effect since July 24, 2026

For grid equipment, the Section 232 metals tariffs matter most because they apply to steel, aluminum and copper content from nearly every country of origin. Rules keep changing, so utilities and contractors are writing tariff-adjustment clauses into equipment contracts.

How equipment costs become delivery rates

When a utility installs a transformer, it does not bill the cost to customers that year. The asset enters rate base, and customers pay for it over its life through:

  • Return: a PUCO- or FERC-approved return on the undepreciated balance.
  • Depreciation: recovery of the cost over the asset's service life.
  • Taxes: the income taxes tied to that return.

Distribution equipment is recovered through PUCO rate cases (now on House Bill 15's three-year cycle, with forecast spending trued up to actual) and distribution riders. Transmission equipment is recovered through FERC formula rates that update annually and flow through riders such as AEP Ohio's BTCR and FirstEnergy's Rider NMB.

Illustrative example. Suppose tariffs and shortages add $10 million to a utility's equipment spending in one year. Assume a 40-year life (2.5% depreciation a year) and a 9% pre-tax return on the undepreciated balance. The first-year revenue requirement is about $1.15 million ($250,000 of depreciation plus $900,000 of return), and it declines slowly as the asset depreciates. One year's price increase is therefore small per kWh; what accumulates is higher prices repeated across a multi-year capital program.

That is why the capital plans in current Ohio cases matter more than any single tariff headline. FirstEnergy's Ohio utilities propose about $800 million a year of infrastructure investment in their 2027–2029 plan, and AES Ohio and Duke Energy Ohio have their own cases pending. Equipment inflation is embedded in those forecasts.

What it means for business customers

  • Delivery rates. Expect the effect through 2027–2029 rate plans and annual transmission updates, not as a separate line item. There is no "tariff rider."
  • Your own service upgrades. New or larger service can require utility transformers and switchgear, plus customer-owned gear on your side of the meter. Ohio's line-extension rules can require customers to pay part of the utility-side cost. Ask for timelines and cost estimates early, and plan for equipment lead times that can still run many months.
  • Contracts with contractors. Look for tariff-adjustment or material-escalation clauses in electrical bids, and ask how long quotes are valid.
  • Supply is separate. Your generation price is set by the market and your contract; grid-equipment costs sit in delivery charges that apply whoever your supplier is.

For equipment you buy for your own site, such as solar, batteries, lighting, HVAC and switchgear, see equipment tariffs and on-site purchases. For who pays for Ohio's transmission and distribution build-out overall, see Ohio energy infrastructure modernization. Rate-case timing by utility is in Ohio utility rate cases in 2026, and AEP Ohio's transmission charge is explained in AEP Ohio transmission charges.

FAQ

Do tariffs on transformers raise my electric bill right away?

No. Utilities recover equipment costs over decades through rate base, so tariff-driven price increases reach delivery rates gradually, mainly through rate cases and annual transmission formula updates.

Can I avoid these costs by switching electricity suppliers?

No. Grid equipment costs are recovered in distribution and transmission charges, which every customer on the utility pays. Switching suppliers changes only the generation portion.

Should I order equipment for a planned service upgrade now?

If you have a firm project, start the utility request and equipment procurement early. Lead times have improved from their 2024 peak but can still be long, and quotes may carry tariff-adjustment clauses.

Is the transformer shortage easing?

Partly. Distribution transformer lead times fell sharply between 2024 and mid-2025, but large power transformers remained backlogged, and analysts expect demand growth to outpace new factory capacity for years.

Sources

Request a reviewCall