How Ohio Machine Shops Should Buy Electricity

Ohio market insight · Industry strategy

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

The short answer

Start by finding out which side of the 700,000 kWh-a-year line your shop falls on.

Below it, you're a small commercial customer. Suppliers price you from standard offers, you get HB 15 renewal notices and a 7-day right to cancel a new enrollment, and a community aggregation can enroll you if you're not under contract.
Above it, or as part of a multi-state national account, you're mercantile. That means custom pricing built from your interval data and capacity tag, no statutory renewal notices, and HB 15's right to put your own or third-party generation behind the meter.

On either side, a shop's cost per kWh depends as much on how many machines, compressors and HVAC units run at the same time as on the supply price. Demand and capacity-tag management belong in the buying plan.

This page is for job shops, CNC and fabrication shops. For the vertical overview, see machine shops and manufacturing. For energy-intensive plants and HB 15 self-generation, see plastics and chemical plants.

Where a machine shop's electricity goes

EIA's 2022 manufacturing survey attributes about 52% of manufacturing electricity to machine drive: motors running spindles, hydraulic pumps, air compressors, coolant pumps and chip conveyors. The rest goes to HVAC, lighting, and ovens or heat treatment where a shop has them. Motor-driven load follows the shift schedule, so a shop's highest demand usually comes when a shift starts, not during steady cutting.

Sub-mercantile vs mercantile

The 700,000 kWh line is about 58,300 kWh a month. That works out to roughly 80 kW of average load around the clock, or about 170 kW averaged over a two-shift, five-day week.

	Sub-mercantile (up to 700,000 kWh/yr)	Mercantile (over 700,000 kWh/yr, or part of a multi-state national account)
Class in PUCO's supplier rules	Small commercial	Mercantile
How suppliers price you	Standard price matrices, with quotes in days	Custom, using interval data and your capacity tag
HB 15 renewal notices (90–60 and 45–15 days before a fixed price converts to variable)	Only if demand is 25 kW or less — most shops exceed that	No, so track your own end date
7-day rescission after the utility's confirmation letter	Yes	No
Supplier complaint-response rules	Yes: status report within 3 business days	No, so rely on the contract's dispute terms
Community (governmental) aggregation	Can be enrolled by opt-out if not under contract	Only by opting in
Behind-the-meter generation under HB 15	Not specific to this class	Your own or a third party's generation may be connected behind the meter

A shop close to the line should know which side it's on before signing. Adding machines or a second shift can push it over mid-contract, and that changes both the rules and how much usage variation the contract allows.

Demand: it's the combined load, not one machine starting

Utilities bill demand on your highest 15- or 30-minute average, as your tariff specifies. A single motor's inrush lasts seconds and barely moves a 15-minute average. What sets the monthly peak is load running at the same time: compressors loading up, spindles warming up, hydraulic units starting, HVAC recovering from overnight setback and a heat-treat oven ramping, all within the same interval at 7 a.m.

Tactics that usually cost little:

Stagger start-ups across two or three demand intervals instead of starting everything at once.
Sequence compressors so one base-load machine runs and the second only trims, rather than two running partly loaded. Fixing air leaks cuts compressor run time too.
Move ovens and heat treatment out of the first hour of the shift.
Check for a ratchet. Some rate schedules keep billing a percentage of a past peak for months, so one bad Monday can follow you.
Check power factor. Large motor loads can trigger a power-factor adjustment; see power factor basics.

For mechanics and more tactics, see demand charges explained and cutting peak demand.

Capacity tag: the number set once a year

Your capacity tag resets every June 1, based on your load during PJM's summer peak hours the year before. Those peak hours fall on hot weekday afternoons, which are production hours for most shops. Illustrative cost for a 150 kW tag:

Delivery year	PJM price	Cost for a 150 kW tag
2024/25	$28.92/MW-day	about $1,584
2026/27	$329.17/MW-day	about $18,023
2027/28	$333.44/MW-day	about $18,257

Cutting 30 kW during peak-alert hours, for example by moving a heat-treat run or idling a second compressor from mid-afternoon into early evening, would be worth about 30 × $120.15 = $3,605 a year at 2026/27 prices. You collect that directly only if your contract passes capacity through or re-prices your tag each June. Under a fixed price that locked in your tag at signing, the benefit appears at your next renewal. See the PLC reduction playbook.

Buying posture by shop size

Small job shop (well under 700,000 kWh). Compare supplier offers with your utility's default price for the same months, generation against generation. A fixed price with capacity included, for 12–36 months, is usually the right product. End the contract just before a June 1. Don't sign on the spot with door-to-door or phone sellers: check the supplier on PUCO's certified list, and remember the 7-day rescission window.

Near the line (a few hundred thousand kWh either side of 700,000). Ask for bandwidth that covers realistic growth, and a material-change clause with a formula for new equipment rather than "sole discretion." Plan now for renewals without statutory notices in case you cross the line.

Mercantile shop. Run a proper bid with interval data and your current capacity tag; see the RFP process guide. Decide on capacity treatment deliberately: keep it fixed if you won't manage summer peaks, or pass it through if you will. PJM prices are known through May 2029, so the pass-through risk is your own tag, not the auction. Weigh on-site generation separately, including the federal tax-credit deadlines, and confirm those with a tax adviser.

Funding efficiency projects. None of Ohio's four investor-owned utilities currently offers business efficiency rebates, so don't build a VFD or compressor project around one. See funding efficiency without rebates.

FAQ

Is my machine shop a mercantile customer?

Under Ohio law, you are if you use more than 700,000 kWh a year for nonresidential purposes, or if you're part of a national account with facilities in one or more states. That's about 58,300 kWh a month, which your last 12 bills will show.

Why is my demand charge high when my kWh didn't change?

Demand is billed on your highest 15- or 30-minute average, so starting several large loads in the same interval sets the month's peak regardless of total energy. Staggering start-ups and sequencing compressors are the usual fixes.

Should a machine shop pass capacity through or keep it fixed?

Keep it fixed if you want one predictable price and won't cut load during summer peak alerts. A pass-through makes sense if you will. PJM prices are set through May 2029, so the variable is your own tag.

Can a small machine shop be enrolled in a community aggregation?

Yes, if the program includes businesses, your account uses up to 700,000 kWh a year, and it isn't under a supplier contract. You'll get a notice with at least 21 days to opt out.