MOUNT VERNON — Mount Vernon residents will see an increase in their electric bill when the city’s electric aggregation contract ends in December.
At Monday’s council meeting, Mark Frye of Palmer Energy estimated that bills will increase by about $35 a month.
Under the current five-year contract, residents pay 4.69 cents per kilowatt-hour (kWh). American Electric Power Ohio’s rate through September is 10.5 cents/kWh.
Safety-Service Director Tanner Salyers said that in negotiating a new contract, the city is at the whim of market volatility.
“So we’re going to lock in a year rate and see where this evens out,” he said. “We don’t want to lock in another five-year term when [prices] are at record highs. We want to give them time to come back down.”
Frye said if the city can beat AEP’s price, it will save residents money.
“It might not be as much money as we want, but it’s saving them some money. And if you can’t beat the utility, then you might want to push the pause button,” he said.
Two pieces of legislation relating to electric aggregation are pending before the council. One amends the program’s operations plan.
The other authorizes the administration to contract with a supplier.
The council scheduled a special meeting on Sept. 29 to vote on the legislation rather than waiting until the Oct. 13 meeting.
Palmer Energy sent out a Request for Proposal to energy suppliers and expects to receive proposals early next week. The special meeting enables the administration to act swiftly when proposals are received.
Salyers illustrated the need for speed with the analogy of a motorist who sees one gasoline price on their way to work in the morning, but on their return home, the price has increased.
What’s driving rising electric bills?
For homes and small businesses, roughly half of the electricity cost is local distribution charges (wires and towers). The other half is the energy cost: the third-party electricity supply.
Frye said that historically, 80% of the energy cost was the energy itself. Ancillary fees (5%) and capacity (15%) made up the remainder.
“Unfortunately, that [capacity] number has gone materially higher, and probably for the next few years it’s going to be 25% of your bill. The energy cost itself is also increasing markedly,” he said.
PJM Interconnection manages the electric grid for Ohio, the District of Columbia, and 12 other states.
For about 15 years, electricity demand was relatively flat. Consumers took cost-saving measures, such as switching to energy-efficient light bulbs.
Additionally, Frye said that for every coal-fired generation plant that shut down, a natural gas-fired generation station came on.
“Those things kind of balanced each other out from a price point perspective,” he said.
However, demand started to rise in 2024 and rose again in 2025.
Data centers and increased demand
Data centers are the largest consumers of the increased demand. Frye said the demand is so immense that hooking a power plant to a data center might not be sufficient.
Frye cited Microsoft’s deal to refurbish the Three Mile Island plant in Pennsylvania as an example of how data centers are ensuring they have the power they need to operate.
“When these loads come on, they have started to shift the marketplace,” he said.
According to Frye, AEP Ohio has 600 MW on board for data centers and has contracted for 4,400 MW demand in Central Ohio, which includes Knox County. The energy supplier has applications for another 30,000 MW.
The entire transmission grid of AEP Ohio, which Frye said is the most robust in the country, only has 22,000 MW of current demand.
“So there are a lot of investments that need to be made by the utilities and the transmission grids. All of these things are rippling through the years, but that is what we’re facing in the marketplace,” Frye said.
“So these charges are going to be materially higher than what your customers have gotten used to over the last few years.”
He acknowledged developers will not build the vast majority of data centers, but the market anticipates a large portion will be constructed.
“That’s spooking the market and pushing these numbers somewhat higher than they necessarily need to be,” Frye said.
Rising auction rates
Frye said PJM does a good job of keeping the lights on and avoiding power outages. However, one way PJM chose to do that is by creating a generation capacity market in areas where consumers can buy their own generation supply.
“That’s basically a price mechanism to pay generators to be available and contracted to stand by in the event that they are needed to come online and create generation access,” he explained.
Those payment rates are set through auctions. Historically, auctions occurred three years in advance.
Recently, however, they have been delayed.
Before May 31, 2025, the rate was $30 per megawatt day (MWd). Rates jumped to $270 at the July 2024 auction and to $329 at the July 2025 auction.
“Now, this is a portion of a portion of your bill, but you can imagine the impact that that has on your cost per kWh and therefore your cost, whether you’re buying from the utilities or whether you’re buying through aggregation,” Frye said.
Expanding the aggregation consumer pool
Mayor Matt Starr said the city switched from Buckeye Energy Brokers to Palmer Energy in part because Palmer also represents Fredericktown in its aggregation program.
Both municipalities are on the same schedule for negotiating new aggregation contracts and are working together with Palmer.
A Mount Vernon-Fredericktown partnership increases the number of potential customers in the consumer pool, which helps secure a lower rate from energy suppliers.
Frye said that since Palmer represents entities in Licking and Muskingum counties, it could potentially include them in an even larger aggregation pool at some point.
Buckeye Energy Brokers has concerns
Tom Bellish, president of Buckeye Energy Brokers, spoke during the council’s public participation segment.
He was concerned that a specific provider was not listed in the ordinance amending the city’s operations plan for its aggregation program.
The plan previously mentioned Bellish’s company; however, the city is now using Palmer Energy as its consultant. The amended plan uses the generic term “provider.”
Bellish also voiced ethical concerns about Frye, who had served as a Sylvania councilman for 10 years before being elected mayor earlier this year. Bellish alleged that Frye’s company won Sylvania’s aggregation contracts without sending out RFPs during Frye’s tenure on council.
In making final remarks after the legislative session concluded, Salyers said Bellish’s comments were inappropriate and unprofessional and that Bellish is upset with losing the contract.
Salyers said the city selected Palmer Energy because it was a company that worked with municipalities, was recommended by the Ohio Municipal League and the County Commissioners Association of Ohio, and represented Fredericktown.