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Future Outlook: Ohio Electric Rates Forecast

Written By: Justin Hardy
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Last Updated: 07/12/2024

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Key Takeaways

  • Understanding Deregulation: Ohio's electricity deregulation allows consumers to choose their supplier, promoting competition and potentially lower rates.
  • Current Trends: The average electric rate in Ohio is 8.8 cents per kWh, which is below the national average. Many suppliers are offering hot deals on new plans.
  • Future Influences: The Ohio government is focused on infrastructure upgrades and growing renewable energy investments to bring price stability and energy security as demand rises in the coming years.
  • Consumer Tips: Homeowners, business owners, and renters can save on electricity by comparing rates on ElectricityRates.com, using energy-efficient appliances, and exploring renewable energy options like solar panels.

If you live in Ohio, you may have been shocked at rate hikes last year across the state. And as we all gear up for summer, many Ohioans are concerned about their energy bills. We have good news for you because the Public Utilities Commission of Ohio (PUCO) just announced a major drop in Ohio Utility energy rates.

That's right, nearly a 24% decrease in Ohio's price-to-compare' rates across providers. The Buckeye State is experiencing massive shifts in its energy landscape, and whether you’re a homeowner, business owner, or renter, staying informed about the factors that influence electric rates is key to managing your electricity expenses and finding the right plan for you.

As always, ElectricityRates.com puts you in control of your electricity bill. Today, we're sharing our Ohio electric rates forecast, covering the history of deregulation, current market trends, and what you need to know to save on future rates.

History of Ohio’s Electricity Deregulation

Ohio residents enjoy the privilege of Energy Choice. This means you can shop freely between certified retailers instead of automatically receiving power from your area's utility company. The state's transition to a deregulated electricity market began in the late 1990s. The goal was to spark competition among electricity providers, ultimately benefiting consumers with lower rates and better service options.

Before deregulation, utilities operated as monopolies, controlling both the generation and distribution of electricity. Four major companies – AEP Ohio, Dayton Power & Light (now AES Ohio), Duke Energy, and FirstEnergy – dominated power generation in the state. The passage of Senate Bill 3 in 1999 marked a significant shift, allowing consumers to choose their electricity suppliers while still relying on local utilities for distribution.

The impact of deregulation has been mixed. On one hand, it has provided consumers with more choices and the potential for lower rates. On the other hand, the market has experienced fluctuations, with rates sometimes rising due to various factors such as supply and demand dynamics and regulatory changes. Heading into 2025, Ohio’s electricity market remains competitive, with numerous suppliers offering a range of plans to suit different needs.

Price To Compare Ohio

In Ohio, the Public Utilities Commission of Ohio (PUCO) requires electricity bills to show a “Price to Compare” to help people choose their energy supplier. This helps residents see if switching suppliers could save them money.

Ohio electric companies buy energy through auctions to supply customers who haven’t picked a different supplier. The price they pay in these auctions helps set the standard rate, approved by PUCO, that people pay if they don’t switch suppliers. This auction price affects the “Price to Compare” and can change monthly due to various factors, like weather.

The current price per kilowatt-hour (kWh) in Ohio varies depending on the supplier and the specific plan chosen by the consumer. As of 2024, the average residential electricity rate in Ohio is around 8.8 cents per kWh, which is below the national average of 16 cents per kWh. This competitive rate is one of the benefits of a deregulated market, where suppliers must offer attractive rates to win over consumers.

Major electricity suppliers in Ohio include AEP Ohio, Duke Energy, AES Ohio and Ohio Edison. These companies provide a variety of plans, including fixed-rate, variable-rate, and renewable energy options. Renewable energy plans continue to gain in popularity as many plans require zero panel installation.

Sources of Electricity in Ohio

Ohio’s electricity generation relies on a mix of fossil fuels, nuclear energy, and renewable sources. Here is the breakdown:

  • Fossil Fuels: Coal and natural gas remain significant contributors, accounting for about 60% of the state’s electricity generation. However, their share is gradually declining as cleaner energy sources gain traction.
  • Nuclear Energy: Ohio has two nuclear power plants: the DavisBesse Nuclear Power Station in Oak Harbor, operated by Energy Harbor, and the Perry Nuclear Power Plant, operated by First Energy in Perry, Ohio. Together, they provide between 12 and 15% of the state’s electricity. Nuclear energy is a stable and low-emission source, playing a crucial role in Ohio’s energy mix.
  • Renewable Energy: Wind, solar, and hydroelectric power are growing rapidly and currently contribute about 25% to Ohio’s electricity generation. State incentives, consumer interest, and declining costs are driving the rapid expansion of renewable energy projects.

Factors Influencing Ohio Electric Rates

Global and regional factors influence how much you pay for energy in Ohio. Key factors include infrastructure improvements, investments in renewable energy, increases in demand, and the decline of fossil fuels. See below for their shortand long-term impacts on energy costs.

Infrastructure Improvements

Ongoing and planned infrastructure projects are essential for maintaining and upgrading the electricity grid. These projects can improve reliability and efficiency but also have significant costs. Upgrades to transmission lines, substations, and other critical infrastructure can increase temporary rates as utilities recoup their investments. However, in the long run, these improvements can help stabilize rates by reducing maintenance costs and enhancing system reliability.

Pros:

  • Improved reliability and fewer outages
  • Enhanced grid efficiency
  • Potential long-term cost savings

Cons:

  • Short-term rate increases to cover investment costs
  • Disruption during construction phases

Current Ohio Infrastructure Improvements

FirstEnergy’s Grid Modernization II Plan:

  • A four-year, $421 million plan to expand smart meter deployment to an additional 1.4 million customers in Ohio.
  • Builds upon previous system upgrades, including the installation of approximately 706,000 smart meters.
  • Aims to empower customers with more detailed billing information and control over energy usage.
  • Includes a $3 million per year Smart Thermostat Rebate program for eligible residential customers.

AEP Ohio’s Infrastructure Improvement Plan:

  • AEP Ohio is investing nearly $2 billion in infrastructure improvements over five years (2019-2023).
  • Includes upgrading electric equipment, trimming trees, and improving the overall electric service.

AES Ohio’s Smart Grid Phase 2 Plan:

  • Aims to improve system stability, performance, and communication capabilities.
  • Prepares the grid for integration of Distributed Energy Resources (DER).
  • Proposes to invest $682.7 million in capital projects over a 10-year period. Focusing on automation of distribution operations, advanced grid intelligence and telecommunications and cybersecurity

Federal Grid Resilience Funding:

  • At least $14 million in improvements to the resilience of Ohio’s energy grid through a grant to the Public Utilities Commission of Ohio (PUCO).

Ongoing Efforts:

  • Utilities are working on improving grid reliability, reducing outages, and decreasing restoration times.
  • There’s a focus on creating an energy grid that works for all communities, regardless of location or service provider.

These improvements collectively aim to modernize Ohio’s energy infrastructure, enhance reliability, integrate smart technologies, and prepare the grid for future challenges and opportunities.

Investments in Renewable Energy

Renewable energy investments are a significant factor in shaping Ohio’s electric rates. As the state continues to support and expand renewable energy projects, the initial costs can lead to temporary rate hikes. However, the long-term benefits include reduced dependence on fossil fuels, lower emissions, and the potential for stable or even decreasing rates as renewable technologies become more cost-effective.

Pros:

  • Cleaner energy and reduced environmental impact
  • Potential for long-term rate stability
  • Job creation in the renewable energy sector

Cons:

  • Initial high investment costs
  • Intermittency issues with some renewable sources (e.g., solar and wind)

Decline of Fossil Fuels

The decline of fossil fuels in Ohio’s energy mix is driven by environmental regulations, market forces, and public demand for cleaner energy. As coal plants retire and natural gas usage peaks, the state is transitioning to more sustainable energy sources. This shift can lead to fluctuations in electric rates, particularly if the transition is not managed smoothly.

Pros:

  • Reduced greenhouse gas emissions
  • Improved air quality
  • Alignment with global trends towards sustainability

Cons:

  • Potential for short-term rate volatility
  • Economic impact on communities reliant on fossil fuel industries

Short-term Forecast for Ohio Electric Rates

Ohio’s electric rates are expected to experience moderate fluctuations in the short term. Factors such as infrastructure upgrades, renewable energy investments, and changes in fossil fuel usage will play a significant role.

Ohioans should expect short-term rate decreases due to the lower auction rates just announced by the Public Utilities Commission.

Long-term Forecast for Ohio Electric Rates

Looking ahead past the next decade, Ohio’s electric rates are projected to become more stable as renewable energy becomes more prevalent and cost-effective. The state’s commitment to reducing its reliance on fossil fuels and enhancing grid infrastructure will be key drivers. Additionally, advancements in energy storage and smart grid technologies could further contribute to rate stability and efficiency.

It's important to remember that given a long enough period of time, the price of everything goes up. If you paid for electricity in Ohio in 1973, you would have only paid 2.4 cents per kilowatt hour (kWh), but that rose to 7 cents per kWh in 1982. And today it's much higher.

That's why it is essential to be aware of changes in energy prices and compare Ohio rates and providers on ElectricityRates.com. Simply enter your ZIP Code in the search bar for a side-by-side comparison of top energy providers and plans near you so you can start saving today.

Impact on Homeowners

Changes in electric rates can significantly affect homeowners’ monthly budgets. Understanding the factors influencing rates and taking proactive steps can help mitigate these impacts.

Simple measures like energy-efficient appliances, smart thermostats, and home insulation can lead to substantial savings on electricity bills. Additionally, homeowners can consider installing solar panels, which, despite the initial investment, can provide long-term savings and reduce dependence on grid electricity.

To learn more, see our Energy Saving articles here.

Impact on Business Owners

Business owners face unique challenges when it comes to managing electricity costs. Fluctuating rates can impact operating expenses and profit margins. To address this, businesses can implement energy management systems, optimize operational schedules, and invest in energy-efficient equipment. Shopping for the best Ohio business electricity suppliers to lock in stable rates can also provide cost long-term savings and business security.

Impact on Renters

Renters may feel limited in their ability to control electricity costs, but there are still several strategies they can employ. Using energy-efficient lighting, unplugging devices when not in use, and managing heating and cooling efficiently can reduce electricity consumption. Renters should also compare electric rates in Ohio to ensure they are on a competitive plan and consider switching suppliers if better rates are available.

See how renters in most states can choose their own electricity provider.

Comparison to Other States

Ohio’s electric rates are generally competitive compared to neighboring states. Ohio’s average residential rate of 8.8 cents per kWh is lower than Michigan, Pennsylvania, and most nearby states. Reasons for these differences include population density, state-specific energy policies, availability of natural resources, and the structure of local electricity markets.

How to Compare Electric Rates in Ohio

All you have to do is enter your ZIP Code in the search bar.

You will get a comprehensive list of available plans, allowing you to filter by rate type, contract length, and renewable energy options. All options have been pre-vetted for top-quality service and reliability.

Best Electric Rates in Ohio

Take advantage of the lower prices just approved by the Ohio PUC. Currently, some of the best electric rates in Ohio can be found through competitive suppliers offering fixed-rate plans. These plans provide price stability and protect consumers from market fluctuations. It’s advisable to review multiple offers, compare terms, and choose a plan that aligns with your energy usage patterns and budget.

Future of Renewable Energy in Ohio

The future of renewable energy in Ohio looks promising, with continued growth expected in wind, solar, and other renewable sources. Government incentives, falling costs, and increasing consumer demand are driving this expansion. As renewable energy becomes a larger part of the state’s energy mix, it will likely contribute to more stable and potentially lower electric rates.

Government Policies and Regulations

Government policies and regulations play a critical role in shaping Ohio’s electricity market. Current policies supporting renewable energy adoption and infrastructure improvements are essential for the state’s energy future. Looking ahead, potential regulations on emissions and energy efficiency standards could further influence electric rates and market dynamics.

Ohio Electric Rates Forecast Takeaway

The Ohio energy system is undergoing an array of changes, and many factors influence Ohio’s electric rates. As the state continues to evolve its energy grid, staying informed and proactive will help you save on electric rates.

Find the best energy provider near you with our search tool today.

What factors influence Ohio electric rates?

Several factors influence Ohio electric rates, including infrastructure improvements, investments in renewable energy, and the decline of fossil fuels. Market dynamics and government policies also play a role.

Are Ohio electric rates going up?

In the short term, Ohio electric rates may experience moderate increases due to infrastructure upgrades and renewable energy investments. However, these are aimed at long-term benefits and rate stability.

How can homeowners save on electricity in Ohio?

Homeowners can save on electricity by using energy-efficient appliances, installing smart thermostats, improving home insulation, and considering solar panel installations.

What are the best electric rates in Ohio?

The best electric rates in Ohio can be found through competitive suppliers offering fixed-rate plans. Comparing multiple offers and choosing a plan that fits your usage and budget is essential.

How does Ohio's electricity market compare to other states?

Ohio’s electric rates are generally competitive compared to neighboring states. Factors such as state-specific policies and local market structures contribute to these differences.

What is the future of renewable energy in Ohio?

The future of renewable energy in Ohio is bright, with continued growth expected in wind, solar, and other renewable sources. This expansion is likely to contribute to more stable and potentially lower electric rates.