05/04/2026
Understanding Electric Rates.
Electric rates are rising across the PJM region, including here in Central Ohio, and I think it is important to explain the issue in a balanced way.
First off, it’s true that renewable energy, especially utility-scale solar and wind, is often cheaper to build and operate than new fossil-fuel generation. Solar plus battery storage is more expensive than solar alone, but it adds an important benefit: flexibility. It allows energy produced during one part of the day to be used when demand is higher including at night.
So why are rates still going up?
The answer is sort of complicated as we do not pay only for the cost of generating one kilowatt-hour of electricity. Our bills also reflect capacity charges, transmission costs, congestion, fuel prices, supplier risk, and the overall reliability needs of the regional grid.
PJM, the regional grid operator that serves Ohio and parts of 12 other states and Washington, D.C., is facing several challenges at once:
Electric demand is rising, especially from data centers, and from electrification of all things plus economic growth, especially in manufacturing and fabrication sectors.
Older power plants are retiring or becoming less economical to operate and maintain. Some elected officials even force these plants to continue, costing us millions.
New generation projects, including many lower-cost renewable and storage projects, have been stuck in a long and antiquated interconnection queue process at PJM. Reforms were studied and slowly applied in 2023 thru 2025.
Transmission upgrades are needed to move power from where it is generated to where it is needed.
Growing demand and a slow process to add new supply caused capacity prices to rise sharply…1038% from 2023 thru this year! PJM must ensure enough resources are available during peak demand and stressful grid conditions.
“Capacity” is not the electricity we use in the moment. It is more like paying to make sure enough dependable power is available when the grid needs it most, for example, during a hot summer evening or a cold winter morning.
For decades, we often talked about electricity in terms of “baseload” power, large plants that run around the clock. Baseload still matters but this is a demand concept and not a technological solution.
The modern grid also needs something broader: FLEXIBILITY. We need a modern power grid with enough resources that can respond to changing conditions, including solar, wind, batteries, demand response, energy efficiency, natural gas, nuclear, and transmission.
The real issue is not simply “renewables versus fossil fuels.” The real issue is whether PJM can connect enough low-cost, reliable, and flexible resources to the grid fast enough to reduce scarcity.
This is why electric aggregation decisions are more complicated than just comparing a renewable rate to a nonrenewable rate. The questions include: How long is the contract? How much market risk is built into the price? What are capacity costs expected to do? What renewable energy credits are being purchased? Are residents being protected from volatility, or locked into a scarcity premium?
My view is that we should avoid slogans and focus on practical outcomes.
We need reliable power.
We need affordable rates.
We need cleaner resources.
We need enough flexible supply.
We need faster interconnection of low-cost generation and storage.
And we need to make sure large new loads, including data centers, pay their fair share of the grid costs they create.
The bottom line is this: clean energy is not inherently the reason rates are rising. Never was. In many cases, renewable energy is among the cheapest new power we can build. The problem is that PJM has not been able to connect enough low-cost and flexible resources fast enough to keep up with rising demand, retirements, and reliability needs.
Until supply, storage, demand response, and transmission catch up, we will continue to see pressure on electric rates.
That is the real challenge: building a grid that is affordable, reliable, flexible, and ready for the future. Locally, this may include opportunities in building low cost power supply behind the meter when you can.