For Immediate Release:	Contact:
Date: 04/1/2025

March 28, 2025

Chairman Sarlo, Chairman DeAngelo, and Members of the Committee-
Thank you for the opportunity to testify today on generation-related electricity price increases, matters that are top of mind for the New Jersey Board of Public Utilities (NJBPU or Board) and the Murphy Administration as a whole.

To start, I will provide a brief overview of the components of your electric bill. Your electric bill is made up of two general buckets. The first is distribution. This is what the Board regulates and on average makes up around 39% of your bill but varies based on the utility. This reflects the costs of infrastructure needed to get electricity to your home, and this is also the portion of the bill that your electric utility will earn a return on their investments.

The other portion of your electric bill is related to supply charges and on average makes up about 61% of your bill, again varying based on your respective electric utility. The NJBPU has no authority over supply charges, your utility provider does not make any money on supply charges and this charge reflects the price of electricity. Electricity is a commodity, not that different from gasoline or eggs. When demand is high and supply is limited, prices go up.

New Jersey is part of a regional transmission operator known as PJM. PJM manages the transmission system to ensure there is enough electricity available at any given time, and for the most part this system has worked. New Jersey imports a portion of its electricity from the PJM grid from generators in states like Ohio, Pennsylvania and Virginia. PJM also oversees the capacity market which helps determine the price of electricity that ratepayers pay. PJM is regulated by the Federal Energy Regulatory Commission or FERC. The NJBPU does not regulate PJM and in fact states don’t even have a vote at PJM.

In February, the Board recently announced the results of the Basic Generation Service auction, which concluded with rate increases that will take effect in June of this year ranging from approximately 17-20% on the average electric customer bill. This is of great concern to the NJBPU, to me personally, and to the Governor. No one wants to see these kinds of impacts to ratepayers, especially at a time when there is so much uncertainty surrounding the nation’s economy.

And while it should give no one here any comfort, New Jersey is not alone. States throughout the nation, including in the PJM region, are seeing an increase in electricity demand. Pennsylvania is facing 10-20% increases, Maryland is facing up to 24% increases, and even Ohio which is often referred to as a low-cost state for electricity is experiencing a 10-15% increase.

The NJBPU is committed to ensuring that utility customers have access to reliable electricity at an affordable price. As President, this mission guides every decision I make.

The driving factor behind the impending rate increases is the cost of purchasing electricity in what’s known as the PJM capacity market. Last year’s auction results, which will affect this coming June bills, were nearly 10x higher than the previous year. This spike is partly due to projections for increased demand and reduced supply of electricity. However, these are just projections, not actual measurements of electricity usage on the grid. Notably, PJM projections changed drastically between 2022 and 2024.

Another driving factor is the PJM market rules which in the last auction created artificial scarcity of supply resources causing prices to skyrocket. PJM has consistently changed and adopted market-rules in a way that favors fossil fuel generators and transmission operators at the expense of ratepayers and states with significant clean energy generation. Most recently, PJM once again changed the way they model for available capacity which is expected to drive auction prices even higher.

Recognizing the challenges we face, the NJBPU has actively worked to propose solutions to PJM to help mitigate rising electricity prices. Even prior to the auction, the NJBPU, along with other state commissions and consumer advocates, urged PJM to address resource adequacy issues. This included advocating for interconnection queue reform and ensuring that all available capacity is accounted for in PJM’s market rules. These proposed changes to market rules will reduce future cost increases by more than $800 million. While PJM has made some adjustments, these changes have only come in response to the advocacy from NJ and other states, and directives from the FERC.

In addition to NJBPU working behind the scenes to pressure PJM to make critical market changes which will reduce costs, Governor Murphy has been outspoken about PJM issues and supported the filing at FERC Governor Shapiro made to set a ceiling for PJM capacity prices.

Existing PJM market rules as well as PJM’s projections created the capacity prices in last year’s auction. However, another driving factor which I’m sure you’ll hear more about from PJM, are real electricity supply shortages. Demand for electricity is on the rise due to load growth from AI data centers, primarily in Virginia and Ohio, new manufacturing facilities, and transportation electrification. According to the PJM 2025 Long-Term Load Forecast, electricity demand within the region is expected to significantly increase, with a projected growth of nearly 40% in the next 14 years, translating to an additional 10,000 megawatts of demand by 2030 compared to previous forecasts.

In order to support this growing electricity demand, we need more generation. The Murphy Administration firmly believes that new generation should come from clean resources like solar, storage, nuclear, and offshore wind. For several years the NJBPU, starting under President Fiordaliso’s leadership, has been pushing PJM to expedite their review of 79 solar and/or storage projects which would get more clean energy projects online in New Jersey.

It’s undeniable that clean energy can and has driven down capacity prices. Without PJM-wide wind and solar resources that bid into the 2024 auction, clearing prices would have been approximately 60% higher, costing New Jersey ratepayers roughly an additional $1 billion in the coming year. We must continue to drive these prices down by bringing more capacity online. We need PJM to address their interconnection queue, and utilities must expedite their own interconnection review. Getting more generation connected from all possible sources will help suppress future price increases and stabilize the market. That includes offshore wind. The Trump Administration’s actions are hindering our ability to bring new clean energy resources online, even though they are the fastest to be built. Uncertainty around federal permitting for offshore and onshore wind projects, along with potential tariffs and supply chain disruptions affecting solar, storage and other generating sources, is further complicating the situation.

As previously mentioned, the NJBPU has no regulatory authority over the PJM related generation costs and the corresponding bill increases. This is important to note because the solutions proposed by the NJBPU, and some of what the legislature has proposed, implicates this regulatory authority.

While the NJBPU has no authority over the generation-related increases, we are committed to helping New Jersey consumers navigate this challenging environment and suggest ways to offset costs where possible. When determining the best path forward to address the generation-related cost increases we are working toward solutions in the near-term, medium-term, and long-term.

In the near term, the Board is proposing a second Residential Energy Assistance Payment in this year’s Clean Energy Fund true-up budget. This will provide a $175 bill credit to over 278,000 income eligible families who are enrolled in the winter termination program. The Board is also reviewing next year’s budget as well as all other available uncommitted clean energy funds to apply a bill credit to all residential customers over the summer when bill increases take effect and usage and costs are highest. Both these actions will help offset some of the generation-related bill increases.

Last week, the Board released a straw proposal to expand the Universal Service Fund (USF) program. That is a bill credit program open to customers who are at or below 60% of the state median income. For a family of four that’s approximately $92,000 a year. In contrast to what some on this committee and others have suggested, the Board is not implementing income-based rates. The Board engaged a consultant and accepted their report on how to address affordability particularly for low- and moderate-income residents. There were several recommendations including income-based rates which we did not move forward on. The two recommendations we are moving forward on via the straw proposal that’s in the packet we provided were to increase the amount of bill assistance, primarily for customers at the higher income end of eligibility, and to require the utilities to meet certain enrollment obligations.

In addition to direct bill credits and expansion of USF, the Board is preparing to open the next community solar allocation. Community solar is open to all utility customers and provides a 20% bill credit or more to participating customers. It is not exclusive to low- and moderate-income residents and it’s available to homeowners and renters without having to install solar on your roof. Customers that subscribe to a community solar project can lessen these rate increases

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The state also has a significant portfolio of energy efficiency programs run by the utilities. The first cycle of these programs has already saved customers $600 million and savings will continue to accrue throughout the life of the installed measures. As important as customer savings from participation, these programs reduce electricity demand which drives down capacity costs. As part of the Clean Energy Act, passed by this legislature and signed by the Governor in 2018, the utilities are required to reduce demand by 2% annually.

Long-term, reducing demand is part of the equation, but as noted above we need more generation, and we need it quickly to stabilize prices in the coming years. As noted above, there are a significant number of solar and storage project applications in the PJM queue. For the projects that have been approved by PJM, to ensure they can get developed within reason and in a timely fashion, the NJBPU is preparing to open another competitive solar solicitation as well as opening the long-awaited storage incentive program. Our focus on these sources of generation is two-fold. Yes, it supports Governor Murphy’s goal of 100% clean energy supporting thousands of good, local jobs, economic and climate benefits. These projects are also the quickest to get developed so they have the greatest impact on near-term capacity prices.

It must be noted that the cost of solar has gone down dramatically over the last decade making it now the cheapest form of new electricity generation. New Jersey’s current solar program administered by the NJBPU offers incentives at half the rate of legacy SRECs. A proposal is under consideration to reduce legacy incentives for already developed projects, many of which were funded at higher rates. Since legacy SRECs are traded at high market values, lowering the incentive to a reasonable fixed price would not affect current or future solar programs but could save New Jersey electric customers over $1 billion in the coming years.

In closing, it’s important to recognize that all new power generation—whether clean or fossil, solar or nuclear, wind or storage—comes at a cost and requires ratepayer support. Discussions about re-regulation or restructuring are complex and should not be taken lightly. Allowing utilities to ratebase generation means customers would bear the cost of building and operating new power plants, likely fossil gas plants, along with the necessary pipelines – and likely does little to speed up the time it will take for new generation to come online. While there can be debate about policy choices, transparency is essential. This Administration’s position is that new generation should be clean, but regardless of the source, new power is never free.

If you have any questions, please contact Sophia Dolashewich, Director of Legislative Affairs, at sophia.dolashewich@bpu.nj.gov.