Massive Capacity Rate Hike Hits Ohio Businesses—What It Means for Your Electricity Costs
As of June 2025, commercial electricity customers across Ohio may begin seeing the impact of a major capacity rate increase, one that exceeds 800% in many Ohio utility regions. That could mean up to 29% higher bills for some businesses. This surge stems from the PJM capacity auction held in 2024, which sets rates for the June 2025 through May 2026 capacity year. Increasing demand from hot temperatures and data centers, along with new generation not coming online fast enough to meet projected demand, are thought to be the primary drivers of prices skyrocketing as the grid works to secure enough generation to ensure reliability.
What Is Capacity and Why Does It Matter?
Capacity charges are one of several components that make up your electricity supply rate. These charges ensure enough power generation is available during peak demand times—especially during extreme weather events. While capacity is just one part of your total electricity cost, it can have a substantial impact, particularly if your facility has a high Peak Load Contribution (PLC).
The result? Many Ohio businesses will see a significant increase in electricity costs, with the full impact showing up in mid-2025 billing cycles and beyond.
What’s Coming Next: Higher Forecasts for Future Capacity Rates
The PJM capacity auction held this summer recently set even higher prices for the 2026/2027 capacity year – coming in at $329.43/MW-day. The Federal Energy Regulatory Commission (FERC) recently approved a $175/MW-day floor and $325/MW-day cap for the 2027/2028 capacity year. These boundaries apply to upcoming capacity auctions and establish a range within which future capacity rates can fall.
While this brings a level of predictability to the market, even the minimum rate is historically high, suggesting that elevated electricity costs are likely to persist in the coming years.
What Businesses Should Do Now
The summer months offer a critical opportunity to take action. One of the most effective ways to manage your exposure to future capacity charges is by lowering your facility’s Peak Load Contribution (PLC)—the metric used to allocate capacity costs.
By curtailing energy use during predicted peak demand hours (usually during hot summer afternoons), your business may be able to reduce next year’s capacity charges.
At Viridi, we help commercial and industrial customers navigate these changes by providing:
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Budget Forecasting: Advanced energy modeling to forecast energy market and capacity cost impacts
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Efficiency & Renewable Energy Solutions: Lowering your usage or generating your own power to help drive lower costs
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Demand Management: Alerts on high-probability peak days to support PLC reduction efforts
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Energy Procurement Strategies: Evaluation of supply products like index, capacity pass-through, and fixed rates
Want help understanding how these changes affect your business? Contact our Energy Engineer, Claire Wilson, at claire@viridi.eco to start a conversation.
In Other News: $2.6 Million in Grant Funding Secured for Viridi Clients
We’re also excited to share some positive momentum: three Viridi clients have been awarded a combined $2.6 million through the Ohio Department of Development’s Advanced Energy Fund (AEF). These grant awards will support energy efficiency projects such as HVAC upgrades, LED retrofits, and smart building technologies—reducing long-term operating costs while supporting sustainability goals.
Considering an energy upgrade? Viridi can help you complete the required energy audit and identify applicable grants or low-interest financing to move your project forward with confidence.
Learn more about Ohio’s upcoming energy efficiency grant programs and how to prepare.
Take Control of Rising Costs
With capacity rates climbing and energy funding opportunities available, now is the time to reassess your energy strategy. Viridi’s team is here to help you plan ahead, reduce risk, and uncover opportunities to save.
Ready to get started? Reach out today.
