Ohio residential and business consumers are grappling with a summer of rising energy costs, a trend that extends beyond the major electricity rate hikes that took effect on June 1, 2025. This upward pressure has continued, with further rate adjustments taking effect for customers of several major utilities throughout July.
For instance, AEP Ohio’s electricity Price to Compare increased again on July 1. On the natural gas side, customers of both Columbia Gas and CenterPoint Energy also saw their monthly supply rates climb at the start of July. This ongoing volatility in both electricity and natural gas sectors underscores the financial challenges facing Ohioans and the importance of understanding the forces at play.
This article breaks down these rate adjustments, delves into the underlying causes, offers a detailed look at the specific impacts from major Ohio utility providers, and outlines various strategies to help Ohioans navigate this challenging financial landscape.
Primary Drivers
Many complex factors influence overall energy pricing; however, the recent, sharp increases in utility bills are primarily driven by a few major issues, which are different for electricity and natural gas.
- Electricity:
- The predominant factor was an unprecedented 833% increase in capacity costs stemming from a June 2024 PJM Interconnection auction. These capacity costs, which are essential for ensuring sufficient power generation to meet peak demand and maintain grid reliability, are directly passed through to consumers by utility companies.
- The rising cost of natural gas is another significant driver. In 2024, natural gas fueled 60.4% of Ohio’s total electricity net generation, making it by far the largest source. Therefore, increases in the market price for natural gas directly lead to higher electricity production costs for consumers.
- Natural Gas: Increases in natural gas rates have been propelled by a combination of factors. These include inherent market volatility, significant investments in infrastructure modernization (such as pipeline and meter upgrades by companies like Columbia Gas), and adjustments to the retail components of standard offer rates.
Impact on Consumers
The financial repercussions for Ohio consumers vary depending on their utility provider, individual energy consumption patterns, and customer class.
- Residential electricity customers are seeing their monthly bills rise by up to 44% based on their specific utility and usage levels, comparing spring rates to the new July rates.
- Business customers could see their electricity rates increase by up to 29%, largely due to the direct impact of higher capacity charges.
Natural gas customers also face higher bills. For instance, Columbia Gas of Ohio’s Standard Choice Offer (SCO) rate has climbed by nearly 26% over the past seven months, rising from $0.5174 per ccf in the December 2024-January 2025 period to $0.6511 per ccf for July 2025.
Understanding the Landscape: Why Your Ohio Energy Bills Changed
A major driver for the electricity rate hikes that took effect on June 1, 2025, was a shockwave from the wholesale energy market. PJM Interconnection, the grid operator for Ohio and 12 other states, holds annual “capacity auctions” to ensure there will be enough power generation available to keep the grid reliable during periods of peak demand.
In the June 2024 auction, which secured capacity for the 2025-2026 period, prices surged by a staggering 833% compared to the previous year. The price jumped from $28.92 per megawatt-day (MW-day) to $269.92/MW-day. This price surge is significant because these capacity costs are a major component of the total ‘supply’ portion of a customer’s bill. While capacity is just one of several factors that determine the final electricity rate, a substantial increase in this single component directly contributes to the higher supply charges customers are now seeing.
This massive increase isn’t indicative of failures from one specific utility or PJM itself, it represents a systemic issue stemming from a multitude of issues coming from the increase in overall demand, the heavy push for more renewable sources, bureaucratic red tape, a lack of new generation, increasing taxes, etc.
Beyond the capacity market, the daily market price for natural gas itself is a crucial factor in the cost of electricity. As we’ve noted, natural gas now fuels 60.4% of all electricity generated in Ohio.
In the PJM market, electricity prices are often set by the most expensive power plant needed to meet moment-to-moment demand. Because natural gas power plants can be turned on and off quickly to meet fluctuating demand, they very frequently end up being these “price-setting” plants. Therefore, when the market price for natural gas fuel goes up, the wholesale price of electricity for everyone also goes up, as the cost to run these essential power plants increases.
Natural Gas Market Dynamics and Infrastructure Investments
The upward pressure on natural gas bills in Ohio stems from a different set of drivers than those affecting electricity capacity costs. Key factors include the inherent volatility of the natural gas commodity market and the substantial, ongoing investments utilities are making in their pipeline infrastructure.
Natural gas prices are subject to fluctuations based on a complex interplay of supply, demand, weather patterns (which heavily influence heating and cooling demand), storage levels, and broader geopolitical events that can impact global energy markets.
Beyond the commodity cost, utilities like Columbia Gas of Ohio are engaged in extensive, multi-year programs to modernize their aging infrastructure. This includes replacing older pipelines, upgrading meter technology, and enhancing the safety and reliability of their distribution systems. These capital-intensive projects, while crucial for long-term service quality, result in increased operational and maintenance costs for the utilities. These costs are generally recovered from customers through adjustments to the distribution component of their bills, following approval from the PUCO. Columbia Gas, for example, has indicated that its recent rate adjustments were intended to cover these modernization efforts.
This means natural gas consumers in Ohio face dual cost pressures. Bills are affected by both the fluctuating market price of the gas itself and the rising costs for delivery. These delivery charges, which cover utility infrastructure projects and operations, are where regulated utilities make their profit. As these essential delivery costs increase, a larger portion of the total bill becomes fixed, making it harder for customers to lower their bills through conservation alone.
A Note on State Regulation (PUCO)
As Ohio’s state energy regulator, the Public Utilities Commission of Ohio (PUCO) is responsible for approving the final rates and service standards for utilities, including the “Price to Compare” (PTC) for electricity and the Standard Choice Offer (SCO) for natural gas.
In light of the recent rate increases, PUCO has emphasized the importance of consumer awareness and actively encourages Ohioans to compare offers from competitive energy suppliers to find a better rate. However, it’s important for consumers to know that many of the underlying costs driving these hikes, like the PJM capacity charges, are determined by regional wholesale markets and are simply passed through by the utilities. This means that even with regulatory oversight, consumers are still exposed to significant market volatility.
Electricity Rate Increases: A Utility-by-Utility Breakdown
New “Price to Compare” (PTC) rates for electricity generation took effect on June 1, 2025, and have been followed by additional adjustments in July. The PTC represents the generation portion of the electricity bill for customers on their utility’s Standard Service Offer (SSO) who haven’t chosen an alternative supplier.
AEP Ohio
- Residential Impact: AEP Ohio’s PTC for residential customers increased on July 1, 2025, to 10.52¢/kWh from the June rate of 9.97¢/kWh. This follows the initial jump on June 1st from the May rate of approximately 7.32¢/kWh.
- Commercial Customer Considerations: Businesses served by AEP Ohio are seeing a significant impact from the capacity cost surge, with potential bill increases of up to 29%. These capacity charges make up a large portion—around a quarter—of a typical business’s energy costs. Adding to the complexity, other rate components like AEP Ohio’s Basic Transmission Cost Rider (BTCR) also changed on April 1, 2025, further affecting non-residential customer bills.
Duke Energy Ohio
- Residential Impact: The residential PTC for Duke Energy Ohio customers changed to 10.43¢/kWh on July 1, 2025, a slight decrease from the June rate of 10.445¢/kWh. However, this new rate is still a significant increase from the pre-June 1st rate of 8.02¢/kWh.
- Small Commercial Impact: Small commercial customers of Duke Energy Ohio also saw a substantial increase on June 1. Their rate rose by 22%, from 8.9594¢/kWh to 10.9549¢/kWh.
FirstEnergy (Ohio Edison, The Illuminating Company, & Toledo Edison)
- Ohio Edison: For the second consecutive month, the residential PTC for Ohio Edison customers increased, rising to 9.53¢ per kWh on July 1, 2025, from the June rate of 9.35¢ per kWh.
- The Illuminating Company: Customers of The Illuminating Company also saw a second straight monthly increase, with their residential PTC rising to 9.39¢ per kWh on July 1, 2025.
- Toledo Edison: The residential PTC for Toledo Edison customers saw a back-to-back monthly hike as well, increasing to 9.77¢ per kWh on July 1, 2025, from the June rate of 9.52¢ per kWh.
- Commercial Customer Considerations: Similar to other electric utilities operating under the PJM Interconnection, business customers of FirstEnergy’s Ohio utilities will bear the impact of the 833% surge in capacity costs. This could translate to bill increases of up to 29% for commercial ratepayers.
AES Ohio (formerly Dayton Power & Light)
- Residential Impact: The residential PTC for AES Ohio customers increased to $0.0945/kWh and is set to be effective from June 1, 2025, to May 31, 2026.
- Commercial Customer Considerations: Business customers of AES Ohio will also be affected by the PJM capacity cost increase. The current PTC for general businesses is $0.0945/kWh but is subject to change so it is important to check periodically.
The increasing energy costs from utilities make offers from competitive suppliers more attractive as many of them generate their own power and can offer better rates and the option to lock in a fixed rate to guarantee price stability in an increasing market.
Empowering Consumers: Strategies to Manage Higher Energy Costs
While the energy rate increases present a financial challenge, Ohio consumers are not without recourse. A combination of understanding billing structures and actively participating in energy choice can help mitigate the impact of these higher costs.
Understanding Your Utility Bill: Supply vs. Delivery Charges
A fundamental step in managing energy costs is understanding the components of a utility bill. Typically, bills are divided into two main parts:
- Supply Charge: This portion covers the cost of the actual electricity or natural gas commodity that a customer uses. In Ohio’s deregulated market, customers often have the option to choose a competitive supplier for this part of their service.
- Delivery/Distribution Charge: This charge covers the cost for the local utility company to transport and deliver the energy to a customer’s home or business. These charges are regulated by the PUCO and were not directly impacted by the recent supply price changes.
Leveraging Energy Comparison Sites and Energy Brokers
The Public Utilities Commission of Ohio actively encourages all Ohioans to explore their options for energy supply to see if an alternate energy supplier is offering a better price. You are able to get “Apples-to-Apples” comparisons that allow consumers to evaluate offers from various Competitive Retail Electric Service (CRES) providers and natural gas marketers. These offers can be compared against the local utility’s default rate—the Price to Compare (PTC) for electricity and the Standard Choice Offer (SCO) or Gas Cost Recovery (GCR) rate for natural gas. Our website provides comparative offer details for customers of all major utilities.
The financial benefits of exploring these options have proven to be substantial. According to a 2019 study from researchers at Cleveland State University and Ohio State University, Ohio’s energy choice programs saved customers an estimated $23.9 billion in total between 2011 and 2018 — an average of nearly $3 billion per year.
When considering switching to a competitive supplier, consumers should carefully evaluate several key factors:
- Price: Is the offered price per kWh (for electricity) or per Ccf, Mcf, or Thm (for natural gas) fixed for the duration of the contract, or is it variable?
- Contract Length: What is the term of the contract (e.g., 6 months, 12 months, 24 months)?
- Early Termination Fees: Are there any financial penalties if a customer decides to switch suppliers or terminate the contract before its expiration date?
- Monthly Fees: Some plans may include additional fixed monthly charges on top of the per-unit energy cost.
- Renewable Energy Options: For environmentally conscious consumers, some suppliers offer “green” energy plans that source electricity from renewable resources.
- Promotional Offers: Consumers should be cautious of attractive introductory or “teaser” rates that may be significantly lower for a short period but can increase substantially thereafter. It is important to understand the pricing structure for the entire contract term.
Conclusion: Take Control of Your Energy Costs
This summer has made one thing clear: relying on your utility’s default rate for electricity and natural gas means accepting unpredictable and rising costs. As we’ve seen, wholesale market forces like PJM capacity costs and volatile natural gas prices are directly impacting your monthly bills, with back-to-back rate hikes becoming the new norm for many.
However, you have a powerful tool to combat this uncertainty: energy choice.
In Ohio’s deregulated energy market, you have the power to switch your energy supplier. By actively shopping for a competitive plan, you can move away from your utility’s fluctuating Price to Compare and lock in a stable, fixed rate. This not only protects you from future price spikes but can also offer immediate savings on the supply portion of your bill.
Don’t wait for the next rate hike notification. Take control of your energy costs today. Explore competitive electricity and natural gas offers from a variety of suppliers to find a plan that fits your budget and provides the price stability you deserve.
