PJM Capacity Cost per kW: Ohio Bill Math for 2026–2029

Ohio market insight · Capacity & grid

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

The short answer

Multiply your capacity tag (in kW) by about $120.15 for June 2026–May 2027, $121.71 for 2027/28 and $118.63 for 2028/29 to estimate your annual capacity cost. Those figures come from PJM's 2025 and 2026 auctions, all of which cleared at the price cap. A site with a 100 kW tag carries about $12,000 a year of capacity cost — which works out to roughly 1.6¢ to 3.6¢ per kWh in the example accounts below, depending on how steadily each uses power. Whether you see that as a separate line or inside a fixed rate depends on your contract.

This page is the calculator. For the auction results and why they hit the cap, see PJM capacity auction results; for how the 2025/26 increase first reached bills, see the 2025 case study; for what the tag is and how utilities set it, see capacity tags explained; and for reducing it, see the PLC playbook.

The formula

Annual capacity cost ≈ tag (kW) × price ($/MW-day) × 365 ÷ 1,000

Delivery year	PJM price ($/MW-day)	≈ $ per kW-year	100 kW tag	500 kW tag	1,000 kW tag
2025/26 (reference)	$269.92	$98.52	$9,852	$49,260	$98,520
2026/27	$329.17	$120.15	$12,015	$60,075	$120,150
2027/28	$333.44	$121.71	$12,171	$60,855	$121,710
2028/29	$325.00	$118.63	$11,863	$59,315	$118,630

These are before utility loss and scaling factors and PJM's final zonal pricing, which usually move the result by a few percent in either direction. They apply to all four Ohio utility zones, which cleared at the same price in each of these auctions.

Year over year, for an unchanged tag: about +$21.63 per kW in June 2026, +$1.56 in June 2027 and −$3.08 in June 2028. The big step is behind you; the next unknown is June 2029, when the 2029/30 price (auction scheduled for December 2026, inside a collar of roughly $175–$325/MW-day) takes over.

Illustrative accounts

All five accounts below are illustrative, not typical or measured. Assumptions: annual kWh = peak kW × load factor × 8,760 hours; the tag is the stated share of peak; prices as in the table above; no utility scaling factors.

Account (assumed)	Peak kW	Load factor	Tag (kW)	Annual kWh	Capacity 2026/27	¢/kWh
Small office/retail, peaks on summer afternoons	60	35%	55	183,960	$6,608	3.59¢
Restaurant, evening peak	120	50%	90	525,600	$10,814	2.06¢
Mid-size office	400	40%	360	1,401,600	$43,254	3.09¢
Two-shift plant	1,500	60%	1,200	7,884,000	$144,180	1.83¢
24/7 cold storage	800	80%	760	5,606,400	$91,314	1.63¢

The same accounts in the following two years, with unchanged tags:

Account	2027/28	2028/29
Small office/retail	$6,694	$6,525
Restaurant	$10,954	$10,677
Mid-size office	$43,816	$42,707
Two-shift plant	$146,052	$142,356
24/7 cold storage	$92,500	$90,159

What the examples show

Load factor drives the cents-per-kWh figure. The cold-storage site pays the most dollars per kW of peak but the least per kWh, because it spreads the same capacity cost over far more hours. The small office pays more than twice as much per kWh as the cold-storage site for the same reason. If you compare supplier prices per kWh across sites, a low-load-factor site will look expensive even when it isn't overpaying.

The tag-to-peak ratio matters as much as size. In this example the restaurant's tag is 75% of its peak because its busiest hours start around the time PJM's summer peak ends. A site whose tag is close to 100% of its peak is running flat out on hot weekday afternoons — that's where tag reduction pays. Divide your tag by your summer peak demand to see where you sit.

Capacity is now a large share of the bill. For the illustrative mid-size office, capacity alone is about 3.1¢/kWh in 2026/27. For context, EIA puts Ohio's average all-in commercial price at about 13.78¢/kWh for January–June 2026.

How the math reaches your bill

Where you buy	How capacity appears	Does your own tag matter?
Utility default service (SSO)	Inside the per-kWh generation price for your rate class, reset each June 1	Not directly — the class average is used
Fixed all-in supplier contract	Priced into the fixed rate at signing	Yes at pricing, and again if the contract re-prices when the tag changes on June 1
Capacity pass-through contract	A separate line: tag × delivery-year price (with scaling)	Fully — every kW changes the bill

Two practical checks follow. First, on a pass-through contract, confirm the price used on each invoice matches the delivery year (June to May), not the calendar year. Second, on a fixed contract, ask for the tag the supplier priced and whether a higher tag next June will change your rate. Your supplier or broker can request your tag from the utility with your authorization.

Using the numbers for budgets and renewals

Budget in delivery years. A calendar-2027 budget spans two prices: $120.15/kW-year for January–May and $121.71 for June–December.
Price the tag you'll have, not the one you had. Tags reset each June 1 from the prior summer's peak hours. If you added equipment or shifts, the next tag may be higher.
Watch June 2029. Any term crossing June 1, 2029 includes a capacity price that isn't known yet.
Value tag reduction at the right price. A kW cut during summer 2027's peak hours saves about $118.63 in 2028/29 — on a pass-through contract, or one that re-prices for tag changes. On default service, it saves little.

For building these figures into an annual plan, see effective energy budgeting; for monthly kW charges that are billed separately from capacity, see demand charges explained; and for the operating side of the peak days that set tags, see PJM alerts and what to do and heat-emergency operations.

FAQ

How much does a kW of capacity tag cost in Ohio in 2026?

About $120 a year for June 2026–May 2027, based on PJM's $329.17/MW-day price, before utility adjustments.

Will capacity costs go up again in June 2027?

Slightly: about $1.56 per kW-year, to roughly $121.71. In June 2028 they ease to about $118.63.

Why is my capacity cost per kWh higher than another site's?

Usually a lower load factor or a higher tag-to-peak ratio. The same tag spread over fewer kWh produces more cents per kWh.

Does my tag affect my bill on the utility's default service?

Not directly. Default prices use rate-class averages, so tag changes mainly matter on supplier contracts that price or pass through your individual tag.