Fixed vs Variable Electricity Rates for Ohio Businesses

The short answer

A fixed-rate contract locks the generation price per kWh for the term, so you know your budget. A variable product changes month to month — either at the supplier's discretion or tied to an index such as PJM hourly prices. Most Ohio small businesses choose fixed prices for certainty; larger, flexible users sometimes save with index or blended products. In 2026 the biggest difference between products is often how capacity is handled, not the energy price.

Product types compared

Product	How the price works	Budget certainty	Typical fit
Fixed, all-in	One ¢/kWh including energy and capacity for the term	High	Small and mid-size businesses, thin-margin operators
Fixed with capacity pass-through	Fixed energy price; capacity billed at cost from your capacity tag	Medium	Sites that can cut load during summer peaks
Supplier variable	Supplier sets price monthly	Low	Short-term bridge only; read terms carefully
Index (hourly/day-ahead) + adder	PJM market price plus a fixed adder	Low	Large, flexible loads with controls and a risk policy
Block and index	A fixed block covers baseload; remaining usage floats on index	Medium	Mercantile accounts with steady baseload
Layered (hedged in tranches)	Buy portions of future usage at several points in time	Medium–high	Larger portfolios wanting to average entry prices

What capacity prices mean for your choice

PJM capacity prices are now known for three years ahead: $329.17/MW-day for June 2026–May 2027, $333.44 for 2027/28 and $325.00 for 2028/29. Because they're known, a fixed price that includes capacity isn't a bet on capacity — it simply bundles a cost that's already set. A pass-through structure makes sense when you can reduce your capacity tag by cutting load during PJM's summer peak hours: at 2026/27 prices each kW of tag is worth roughly $120 a year.

Fixed-rate fine print that matters

• Bandwidth. How much your usage can change before volume true-ups apply.
• Pass-through clauses. Which costs can be added later (transmission, "change in law," new PJM charges).
• Renewal. Under HB 15 (2025), suppliers must notify you twice before a fixed contract rolls to a variable rate; many contracts still auto-renew on variable terms if you do nothing.
• Early termination. Usually a formula based on remaining volume and market prices.

See red-flag contract clauses.

When variable or index can make sense

• You have a written risk policy and someone watching the market.
• Your load is flexible (pre-cooling, storage, shiftable production).
• You're bridging a few months to a planned move, sale or aggregation start.

Index prices spike during heat waves and cold snaps; an unhedged index product can erase a year's savings in a week.

FAQ

Is a fixed or variable electricity rate better for a small business in Ohio?

Most small businesses are better served by a fixed price that includes capacity, because it matches monthly budgeting and 2026–2029 capacity costs are already known.

What happens when my fixed contract ends?

Unless you sign a new contract, many agreements roll to a month-to-month variable price. HB 15 requires two advance notices; calendar your end date anyway.

Can I switch from variable to fixed at any time?

Usually yes for supplier variable products, subject to the contract's notice terms and the next meter-read date.

What is a block-and-index product?

You fix the price for a block of steady baseload and buy the rest at market index prices — common for larger accounts with predictable baseload.