Newsroom & Public Notices

NJBPU Presents Solutions to Rein in Price Volatility and Drive New Power Generation

TRENTON, N.J. – August 13, 2026 – The New Jersey Board of Public Utilities (NJBPU) has released an in-depth study finding that the capacity market run by PJM Interconnection (PJM), the regional grid operator, can no longer deliver reliable power at the lowest possible cost, and NJBPU is calling for reforms to improve it.

“New Jersey ratepayers deserve a clear explanation of why their bills are rising and what can be done about it,” said NJBPU President Ben Hertz-Shargel. “The fastest way to lower bills is getting new power generation built. That requires replacing PJM's unpredictable price spikes with modern rules that attract long-term investment while protecting customers. States must be allowed an active role in PJM governance to ensure wholesale market structures serve the public interest.”

The report, required by the New Jersey Legislature and delivered to Governor Sherrill and lawmakers, comes as New Jersey electricity bills jumped roughly 20 percent last year, driven in large part by rising costs in PJM's capacity market.

PJM Interconnection is the regional transmission organization responsible for coordinating the movement of wholesale electricity and managing grid reliability across 13 states, including New Jersey and the District of Columbia. While capacity charges currently account for approximately 15 to 20 percent of a typical customer’s electric bill, they represent the single largest cost component that state utility commissions like the NJBPU cannot directly set, regulate, or change.

On August 25, 2025, the Legislature passed legislation directing NJBPU staff to investigate whether PJM's capacity market – known as the Reliability Pricing Model – is still doing its job, and to report back within a year.

Board Staff examined how the market is structured, how it's performed historically, and why it's suddenly producing extreme price swings. They reviewed PJM's own auction data, tracked the region's ballooning demand forecasts, and weighed in on reform proposals already being debated by PJM, other states, and federal regulators. Today's report is the result.

This market analysis also directly advances Governor Sherrill’s affordability agenda – launched on her first day in office last January with Executive Order No. 1 to modernize the utility model – by confronting the root cause of recent bill increases.

Recommendations

• Make large new users pay their share. Data centers and similar large loads should bring their own new generation to the grid and those that don’t should accept lower-priority service. New Jersey has already enacted both requirements into state law and the NJBPU has started work on their implementation, ensuring that existing customers are not stuck covering costs they did not create.
• Modernize PJM's market design. Shift from a single annual auction to a seasonal structure that matches supply to real conditions and consider movement to a "prompt" auction that relies on current forecasts instead of pricing three years out.
• Expand longer-term contracting options. Reduce the effects of price volatility for ratepayers and offer long-term financial guarantees so energy companies can more easily secure financing to build new generation.
• Clear the legal path for states to act. Update PJM's governance rules so that states can weigh in on decisions that have reliability and affordability implications on the families and businesses that they have a responsibility to protect.

What Happens Next

The NJBPU will use this framework to advance reforms within PJM's stakeholder process and at the Federal Energy Regulatory Commission (FERC). New Jersey is already working collaboratively with other states and stakeholders, not only on PJM governance reforms but the processes by which regional transmission lines are planned and paid for.

The NJBPU will continue to develop reforms for how businesses and utilities interact with PJM’s markets, not only via new data center rates but through the Virtual Power Plant proceeding and utility business model reform. Over the next year, it will also leverage new statutory authority to regulate local transmission projects, which have driven up rates while often failing to bring in low-cost renewable energy from across PJM’s footprint.

The full report, An Investigation of PJM's Capacity Market, is available here on the NJBPU website.