October 20, 2025 • 8 mins
Associate Professor Noah Dormady of The Ohio State University looks at the numbers and explains why this is happening
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
I had about ten. After seven, we'll switch gears. I
(00:02):
want to talk about the cost of electricity. I'm a
Legacy Retirement Group dot com phone line. It is Associate Professor,
Ohio State Doctor Noah Dormerty Professor. Good morning.
Speaker 2 (00:11):
How are you, sir, I'm very well. Thank you for
having me, Thanks for.
Speaker 1 (00:14):
Taking some time in joining us. I saw you in
an article on I think it was a ten TV
article and the cost of electricity today it just continues
to climb. Short question, probably more complicated answer.
Speaker 2 (00:30):
Why well, I think let's look at the numbers. A
lot of people like to compare back to right before
COVID October twenty twenty, at the same time of the
year right here in central Ohio. If you're consuming a
typical household of about a thousand kilo at hours in
a month, your bill's gone up by about fifty three percent.
So the distribution part of our bill has gone up
(00:51):
by about twenty percent, Transmission has gone up by about
forty two percent, and generation has gone up a whopping
ninety one percent since that time, just in the last
five years.
Speaker 1 (01:00):
And that's and that's not going to change. We're still
going to continue that trajectory.
Speaker 2 (01:05):
Well, you know a lot of experts debate that very issue.
There's lots of I'm not going to I'm not going
to commit to an answer on that, but you know
if I had that answer, I'd have a different job
of that's for sure.
Speaker 1 (01:17):
That's right, doctor Noah Dormandy, OSU professor talking about energy
costs in Ohio. How much of this is related to
these data centers? I mean these are popping up almost weekly, Noah,
that we're seeing these, you know, new developments coming in,
whether it's Amazon, of course, we know about the Intel
plant in Licking County that's not yet operational. How much
(01:39):
of our electric is being used and sucked up and
then therefore we're having to shoulder the bill because of
these data centers.
Speaker 2 (01:48):
Well, you know the big one that ninety one percent
I just described, A big chunk of that is due
to our capacity markets on the wholesale market. So our
utility companies, companies like AEP here in Ohio, they go
and they buy the electricity on our behalf from PJM,
from the wholesale market, and they turn around and retail
it to us. So we're paying retail prices, but the
(02:08):
capacity market on that wholesale market has gone up considerably.
So two years ago we were paying twenty eight dollars
a mega lot day, which is the unit on that market.
That's jumped up to three hundred and twenty nine dollars
a megawat day just recently. A lot of that drive
is due to those data centers AI a projected load
(02:28):
growth of about fifty percent by twenty thirty according to
AEP Ohio's forecasted load growth. So our capacity prices really
skyrocketed in anticipation of the growth of those data centers.
Speaker 1 (02:41):
So looking at these data centers and I saw it
just over the weekend. There was a data center that
had some plans to open up in West Jefferson, Ohio,
was Sentinel Data. They scrapped their plans and this was
not an AEP area, this was an Ohio Edison area.
They canceled their plans over power constraints. Ohio Edison said,
(03:02):
you know what, we can't We can't power your plant.
We don't have enough juice to do so that that
is pretty remarkable.
Speaker 2 (03:09):
You know, there's a there's a whole lot of factors
at play there. You know, there was a recent data
center case here within the aep Ohio territory, that put
more of the onus for those cost pressures onto the
data centers themselves. I think there's a lot of economic
factors at play as to why these data centers are
(03:29):
deciding if they do decide to go elsewhere. Ultimately, the
data centers want somebody to socialize their cost pass those
costs onto us as retell consumers. And if they don't
get the subsidies that they want, you know, it's the
free market. They can go elsewhere.
Speaker 1 (03:45):
So there is another story closer to home in Hilliard,
where there's this Amazon data center that's under construction and
they want to I mean, they're at least trying to
come to the table with their own solution. They wanted
to build a fuel cell facility the data center to
help power it. Now residents and Hilliard aren't exactly thrilled
with that, but I like the thought of these big companies.
(04:08):
If you want to put in these energy hogs, these
huge data centers, at least make an attempt to provide
your own power. What's wrong with a fuel cell because
and I'm not an expert, but obviously what I've read
is they have low emissions, they're quiet, they're reliable, they're efficient.
What's wrong with with a fuel cell facility to help
power your own data center.
Speaker 2 (04:29):
There's a lot of talk of doing just that, fuel
cells cojen with natural gas on site. There's even talk
of doing small modular reactors at some of these locations.
The problem is permitting and getting hooked up to the grid.
That the regulatory and permitting side of that can take
a lot of time years. Okay, so you know there's
(04:52):
a there's a big administrative backlog to get hooked up
to the interconnection to on PJM.
Speaker 1 (04:57):
You mentioned at the SMRs, these small mod reactors. This
is nuclear. What's your opinion on that? What's your opinion
on nuclear overall as a power source. I mean a
lot of people here nuclear and they instantly go to
Three Mile Island, which is nineteen seventy nine. I mean,
the technology has changed pretty dramatically when it comes to nuclears.
(05:17):
But SMRs those are they're clean, and they're small, and
you know, you are a self sustaining operation at that point.
Speaker 2 (05:26):
You know, I hosted some visiting scholars from Japan here
at Ohio State a few years back, looking at that
very question of small modular reactors. There's a lot of
favorable benefits associated with them. The cost structure is competitive,
there's a lot of positive reasons to consider SMRs. The
regulatory process, again though, is not there. It's lagging the
(05:47):
actual science in the marketplace.
Speaker 1 (05:49):
Interesting speaking with Professor Noah dormerdy OSU. He specializes in energy.
So back down to earth, what can our listeners do?
What can people that are hearing our voices as morning
do if they're seeing their energy bills, they're you know,
and natural gas electric of course gasoline's a little more
reasonable now. But what can you do if your electric
(06:10):
bill is getting out of reach for you? Is there
any steps you can take?
Speaker 2 (06:14):
Well, there's not a whole lot you can do. The
only thing you can really do is, you know, shop
around to get a more competitive rate for that generation
portion of your bill. I encourage people to go look
at the apples to Apple's website, on the Public Utilities
Commission site, shop around. October's typically historically a good month
to shop. You can find a rate that might be
a little bit better than the standard service offer. And
(06:35):
I encourage people to look at their bills and to
shop and find the most competitive rate for generation. You
can't do much about transmission and distribution, but you can
shop around and get a little bit more competitive rate
for the generation portion of your bill.
Speaker 1 (06:47):
You mentioned PUCO, the Public Utilities Commission of Ohio. Do
they have any oversight on the on the price? Can
they cap anything? Are they that is not that's sort
of outside their realm of responsibility.
Speaker 2 (06:59):
Well, no, that's not entirely true. So we've done research
here at Ohio State where we've looked at the auctions
that set the markup for the retail price of generation.
They're called the load auctions or the SSO auctions, and
we've found that those auctions, which are regulated by the PUCO,
we found those auctions to be highly uncompetitive. So we
(07:19):
did a multi year study over the last back to
twenty eleven, looking at every auction that cleared in these
generation markets, and we found, for example, that in some
auctions only it's few as only five bidders showed up
to bid and compete in these auctions, so competition is
really weak. In other auctions, we saw fifteen bidders. To
put numbers into perspective, what we found was that if
(07:43):
you could induce nine additional bidders go up and bid routinely.
In these auctions, consumers would see the same degree of
price relief as the entirety of the US shale groom.
So the markup that that retail markup that we're paying
for generation, that ninety one percent that I just described
could be significantly addressed by regulatory reform and those auctions
(08:04):
that set the retail price, and that's what we're encouraging
a look at on the regulatory side.
I had about ten. After seven, we'll switch gears. I
(00:02):
want to talk about the cost of electricity. I'm a
Legacy Retirement Group dot com phone line. It is Associate Professor,
Ohio State Doctor Noah Dormerty Professor. Good morning.
Speaker 2 (00:11):
How are you, sir, I'm very well. Thank you for
having me, Thanks for.
Speaker 1 (00:14):
Taking some time in joining us. I saw you in
an article on I think it was a ten TV
article and the cost of electricity today it just continues
to climb. Short question, probably more complicated answer.
Speaker 2 (00:30):
Why well, I think let's look at the numbers. A
lot of people like to compare back to right before
COVID October twenty twenty, at the same time of the
year right here in central Ohio. If you're consuming a
typical household of about a thousand kilo at hours in
a month, your bill's gone up by about fifty three percent.
So the distribution part of our bill has gone up
(00:51):
by about twenty percent, Transmission has gone up by about
forty two percent, and generation has gone up a whopping
ninety one percent since that time, just in the last
five years.
Speaker 1 (01:00):
And that's and that's not going to change. We're still
going to continue that trajectory.
Speaker 2 (01:05):
Well, you know a lot of experts debate that very issue.
There's lots of I'm not going to I'm not going
to commit to an answer on that, but you know
if I had that answer, I'd have a different job
of that's for sure.
Speaker 1 (01:17):
That's right, doctor Noah Dormandy, OSU professor talking about energy
costs in Ohio. How much of this is related to
these data centers? I mean these are popping up almost weekly, Noah,
that we're seeing these, you know, new developments coming in,
whether it's Amazon, of course, we know about the Intel
plant in Licking County that's not yet operational. How much
(01:39):
of our electric is being used and sucked up and
then therefore we're having to shoulder the bill because of
these data centers.
Speaker 2 (01:48):
Well, you know the big one that ninety one percent
I just described, A big chunk of that is due
to our capacity markets on the wholesale market. So our
utility companies, companies like AEP here in Ohio, they go
and they buy the electricity on our behalf from PJM,
from the wholesale market, and they turn around and retail
it to us. So we're paying retail prices, but the
(02:08):
capacity market on that wholesale market has gone up considerably.
So two years ago we were paying twenty eight dollars
a mega lot day, which is the unit on that market.
That's jumped up to three hundred and twenty nine dollars
a megawat day just recently. A lot of that drive
is due to those data centers AI a projected load
(02:28):
growth of about fifty percent by twenty thirty according to
AEP Ohio's forecasted load growth. So our capacity prices really
skyrocketed in anticipation of the growth of those data centers.
Speaker 1 (02:41):
So looking at these data centers and I saw it
just over the weekend. There was a data center that
had some plans to open up in West Jefferson, Ohio,
was Sentinel Data. They scrapped their plans and this was
not an AEP area, this was an Ohio Edison area.
They canceled their plans over power constraints. Ohio Edison said,
(03:02):
you know what, we can't We can't power your plant.
We don't have enough juice to do so that that
is pretty remarkable.
Speaker 2 (03:09):
You know, there's a there's a whole lot of factors
at play there. You know, there was a recent data
center case here within the aep Ohio territory, that put
more of the onus for those cost pressures onto the
data centers themselves. I think there's a lot of economic
factors at play as to why these data centers are
(03:29):
deciding if they do decide to go elsewhere. Ultimately, the
data centers want somebody to socialize their cost pass those
costs onto us as retell consumers. And if they don't
get the subsidies that they want, you know, it's the
free market. They can go elsewhere.
Speaker 1 (03:45):
So there is another story closer to home in Hilliard,
where there's this Amazon data center that's under construction and
they want to I mean, they're at least trying to
come to the table with their own solution. They wanted
to build a fuel cell facility the data center to
help power it. Now residents and Hilliard aren't exactly thrilled
with that, but I like the thought of these big companies.
(04:08):
If you want to put in these energy hogs, these
huge data centers, at least make an attempt to provide
your own power. What's wrong with a fuel cell because
and I'm not an expert, but obviously what I've read
is they have low emissions, they're quiet, they're reliable, they're efficient.
What's wrong with with a fuel cell facility to help
power your own data center.
Speaker 2 (04:29):
There's a lot of talk of doing just that, fuel
cells cojen with natural gas on site. There's even talk
of doing small modular reactors at some of these locations.
The problem is permitting and getting hooked up to the grid.
That the regulatory and permitting side of that can take
a lot of time years. Okay, so you know there's
(04:52):
a there's a big administrative backlog to get hooked up
to the interconnection to on PJM.
Speaker 1 (04:57):
You mentioned at the SMRs, these small mod reactors. This
is nuclear. What's your opinion on that? What's your opinion
on nuclear overall as a power source. I mean a
lot of people here nuclear and they instantly go to
Three Mile Island, which is nineteen seventy nine. I mean,
the technology has changed pretty dramatically when it comes to nuclears.
(05:17):
But SMRs those are they're clean, and they're small, and
you know, you are a self sustaining operation at that point.
Speaker 2 (05:26):
You know, I hosted some visiting scholars from Japan here
at Ohio State a few years back, looking at that
very question of small modular reactors. There's a lot of
favorable benefits associated with them. The cost structure is competitive,
there's a lot of positive reasons to consider SMRs. The
regulatory process, again though, is not there. It's lagging the
(05:47):
actual science in the marketplace.
Speaker 1 (05:49):
Interesting speaking with Professor Noah dormerdy OSU. He specializes in energy.
So back down to earth, what can our listeners do?
What can people that are hearing our voices as morning
do if they're seeing their energy bills, they're you know,
and natural gas electric of course gasoline's a little more
reasonable now. But what can you do if your electric
(06:10):
bill is getting out of reach for you? Is there
any steps you can take?
Speaker 2 (06:14):
Well, there's not a whole lot you can do. The
only thing you can really do is, you know, shop
around to get a more competitive rate for that generation
portion of your bill. I encourage people to go look
at the apples to Apple's website, on the Public Utilities
Commission site, shop around. October's typically historically a good month
to shop. You can find a rate that might be
a little bit better than the standard service offer. And
(06:35):
I encourage people to look at their bills and to
shop and find the most competitive rate for generation. You
can't do much about transmission and distribution, but you can
shop around and get a little bit more competitive rate
for the generation portion of your bill.
Speaker 1 (06:47):
You mentioned PUCO, the Public Utilities Commission of Ohio. Do
they have any oversight on the on the price? Can
they cap anything? Are they that is not that's sort
of outside their realm of responsibility.
Speaker 2 (06:59):
Well, no, that's not entirely true. So we've done research
here at Ohio State where we've looked at the auctions
that set the markup for the retail price of generation.
They're called the load auctions or the SSO auctions, and
we've found that those auctions, which are regulated by the PUCO,
we found those auctions to be highly uncompetitive. So we
(07:19):
did a multi year study over the last back to
twenty eleven, looking at every auction that cleared in these
generation markets, and we found, for example, that in some
auctions only it's few as only five bidders showed up
to bid and compete in these auctions, so competition is
really weak. In other auctions, we saw fifteen bidders. To
put numbers into perspective, what we found was that if
(07:43):
you could induce nine additional bidders go up and bid routinely.
In these auctions, consumers would see the same degree of
price relief as the entirety of the US shale groom.
So the markup that that retail markup that we're paying
for generation, that ninety one percent that I just described
could be significantly addressed by regulatory reform and those auctions
(08:04):
that set the retail price, and that's what we're encouraging
a look at on the regulatory side.
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