The All-In Cost of Commercial Electricity in Ohio
The short answer
An Ohio business's all-in electricity price is a stack of six parts: energy, capacity, transmission, distribution, riders and the kWh excise tax. Capacity is the part that changed most — PJM's price rose from $28.92/MW-day for 2024/25 to $329.17 for 2026/27 — and it is the main reason Ohio's average commercial price reached about 13.8¢/kWh in the first half of 2026, up from about 11.1¢ a year earlier. To compare offers or budget properly, convert every component to ¢/kWh at your own load factor.
For a plain-language tour of the bill itself, see how to read a commercial electric bill; for where each utility prints these charges, see AEP, Duke, AES and FirstEnergy bills compared; and for the non-shoppable charges that moved in 2025–26, see transmission, riders and capacity charges.
The six layers and who sets them
| Layer | What it pays for | Who sets it | Can you shop it? | Usually billed as |
|---|---|---|---|---|
| Energy | Wholesale power, plus line losses, ancillary services and supplier margin | Supplier contract or the utility's default (SSO) auction | Yes | ¢/kWh |
| Capacity | Power plants being available at PJM's peak | PJM auction price × your capacity tag (PLC) | Price no; structure and tag yes | Built into ¢/kWh or billed per kW of tag |
| Transmission | The high-voltage network | FERC-approved rates recovered through utility charges | No | Per kW or per kWh |
| Distribution | Local poles, wires and substations | PUCO rate cases | No | Customer charge plus per kW or per kWh |
| Riders | Specific costs PUCO lets the utility recover | PUCO | No | Per kWh, per kW or % |
| kWh excise tax | State tax | Ohio law | No | Tiered per kWh |
Energy and capacity together make up generation — the part a supplier contract replaces. Everything else stays with your utility.
Capacity: turning $/MW-day into ¢/kWh
PJM quotes capacity in dollars per megawatt-day. To see what it means per kWh at your site:
- Annual cost per kW of tag = $/MW-day × 365 ÷ 1,000. At $329.17, that's about $120.15 per kW-year.
- Annual capacity cost = your capacity tag (kW) × $/kW-year.
- ¢/kWh = annual capacity cost ÷ annual kWh × 100.
If your tag is close to your peak demand, step 3 simplifies to $/kW-year ÷ (8,760 × load factor), where load factor is average demand ÷ peak demand. Many sites' tags are somewhat lower than their monthly peaks, because PJM's peak hours don't always coincide with theirs — so treat these figures as an upper-end estimate. Utility scaling factors and losses also move the final number a little.
| Load factor | Typical profile | Capacity at 2026/27 price |
|---|---|---|
| 25% | Single-shift, peaky | ~5.49¢/kWh |
| 45% | Office or retail | ~3.05¢/kWh |
| 70% | Two-shift industrial | ~1.96¢/kWh |
| 90% | Cold storage, 24/7 process | ~1.52¢/kWh |
For comparison, at the 2024/25 price of $28.92/MW-day (about $10.56 per kW-year), capacity for a 45% load-factor site was roughly 0.27¢/kWh. The low-load-factor site pays the most per kWh because the same kW of tag is spread over fewer kWh.
Worked example: 1 million kWh a year at 45% load factor
A site using 1,000,000 kWh a year averages about 114 kW (1,000,000 ÷ 8,760). At a 45% load factor its peak is about 254 kW; for simplicity assume its capacity tag is also 254 kW. Energy is an assumed contract price, and the delivery figures are placeholders — replace them with the numbers from your own bill and tariff.
| Component | Basis | Annual cost | ¢/kWh |
|---|---|---|---|
| Energy | Assumed 6.50¢/kWh contract energy price | $65,000 | 6.50 |
| Capacity | 254 kW × $120.15/kW-year (2026/27) | $30,518 | 3.05 |
| Transmission | Placeholder | $12,000 | 1.20 |
| Distribution (customer, energy and demand charges) | Placeholder | $18,000 | 1.80 |
| Riders | Placeholder | $6,000 | 0.60 |
| kWh excise tax | 83,333 kWh/month through the three tiers ≈ $312/month | $3,742 | 0.37 |
| All-in | $135,260 | 13.53 |
The excise tax math: 2,000 kWh × $0.00465 + 13,000 × $0.00419 + 68,333 × $0.00363 ≈ $311.82 a month.
What the example shows:
- Generation (energy + capacity) is about 71% of the total — 9.55¢, close to the small-business default prices FirstEnergy's utilities charge for 2026/27 (about 9.38–9.45¢).
- Capacity alone is about 23%. Cutting the tag by 10% (25 kW) saves about $3,000 a year — but only if the contract passes capacity through or re-prices for tag changes.
- Delivery and tax are about 29%, and no supplier offer changes them.
Why Ohio's average commercial price rose to ~13.8¢ in 2026
EIA data show Ohio's average commercial price at 10.75¢/kWh in 2023 and 10.66¢ in 2024, well below the US average of roughly 12.6–12.8¢ in those years. For January–June 2026, Ohio averaged about 13.78¢ against 11.07¢ a year earlier, roughly level with the US average of about 13.86¢ (these are preliminary monthly figures).
Capacity explains most of the jump:
- January–May 2025 was priced at the 2024/25 capacity price of $28.92/MW-day.
- June 2025 onward moved to $269.92 (auction held July 30, 2024), and June 2026 onward to $329.17 (auction held July 22, 2025).
- For a 45% load-factor site, going from $28.92 to $269.92 adds about 2.2¢/kWh — most of the roughly 2.7¢ year-over-year increase.
Default prices show the same step: Ohio Edison's small-business average rose from about 8.87¢ to 9.38¢ on June 1, 2026 and Duke's Rate DM first block from about 10.59¢ to 11.36¢. The remainder reflects wholesale energy, riders and delivery rate changes, which moved in different directions by utility — AEP Ohio's and the FirstEnergy utilities' 2026 rate orders produced net decreases, while AES Ohio's settlement raised distribution revenue.
Capacity stays high: auctions have cleared at $333.44 for 2027/28 and $325.00 for 2028/29, both at the price cap.
Which layers you can influence
| Layer | Lever |
|---|---|
| Energy | Shop, time the purchase, choose term and product |
| Capacity | Lower your tag during PJM summer peak hours; choose fixed vs pass-through treatment |
| Transmission | Peak management where charges are per kW; otherwise none |
| Distribution | Demand management; confirm you're on the right rate schedule |
| Riders | None directly — they change through PUCO proceedings |
| Excise tax | Very large users (over 45 million kWh a year) can self-assess at $0.00257/kWh for the first 500 million kWh and $0.001832 above |
FAQ
What share of my Ohio electric bill can I shop?
Only generation — energy plus capacity. In the 1 million kWh example above that's about 71% of the all-in cost; delivery, riders and taxes stay with the utility.
How do I convert a capacity price to cents per kWh?
Multiply $/MW-day by 365 and divide by 1,000 to get $/kW-year, multiply by your capacity tag, then divide by your annual kWh. At $329.17/MW-day, each kW of tag costs about $120 a year.
Why is my all-in price so much higher than my supplier's rate?
The supplier's rate covers generation only. Transmission, distribution, riders and the kWh excise tax are added by the utility on top.
Does load factor change what I pay per kWh?
Yes. Capacity and demand-based delivery charges are fixed per kW, so spreading them over more kWh — a higher load factor — lowers your average cost per kWh.