Some residents in South Jersey have reported utility sticker shock as heat and rates soared during the summer months. (Dana DiFilippo | New Jersey Monitor)
New Jersey lawmakers are set to explore how high temperatures and spiking electricity prices have led to surges in South Jersey residents’ power bills.
The Assembly Telecommunications Committee on Wednesday will hear testimony about summer power bills that invoiced hundreds of dollars more this June and July than they did last summer, price spikes that some residents say they cannot afford in a state that already boasts a high cost of living.
For Linwood resident Lisa Bonanno, whose July electricity bill cost her $500, high bills have forced frugality.
“It has meant that we have had to cut back severely on our food budget,” Bonanno said. “When you have to cut back on your gas and your food, it makes things like packing your lunch, feeding your children difficult.”
Utilities and energy officials have pointed to extreme heat this summer and changes in energy supply and distribution rates to explain the increases.
Unlike prices in traditional commodity markets, electricity prices are typically somewhat insulated from shifts in demand because power providers purchase electricity at auctions in advance and set prices ahead of time based on that purchase price, among other factors.
That means steep shifts in electricity usage won’t immediately result in proportional swings to prices, though electricity auction prices still respond to changes in power supply, projected power usage, and regulations that can push prices up or down.
Atlantic City Electric, which has borne the largest share of recent cost complaints, reported a 13% hike to electricity supply costs between July 2023 and July 2024 due to shifts in demand. Prices rose another 5% due to distribution rates that fund infrastructure upgrades, plus a 2% increase for other miscellaneous costs.
“We recognize our customers’ concerns and the economic challenges so many are facing right now. Atlantic City Electric wants to make certain customers not only understand their bills, but also the resources available to lower energy usage and save money. We will continue to work with local officials to ensure we are meeting the energy needs of our customers and to understand the factors contributing to rising energy costs,” said Candice Womer, a spokesperson for the utility provider.
Hot weather can also lead to higher electricity bills by boosting usage. Even if a consumer leaves their thermostat settings unchanged, higher temperatures and longer stretches of high temperatures can force air conditioning units to work harder and longer.
“We did have those heat waves where it was hot all through the night, so your air conditioner might’ve been running 24 hours. That’s going to increase the amount of electricity you use,” said Brian Lipman, the director of the Division of Rate Counsel, which advocates for ratepayers in utility matters.
In July, statewide temperatures averaged roughly 78 degrees, a little less than a degree above the previous July, and the heat pushed average power usage among Atlantic City Electric customers up by 20%.
Combined with rate increases, that means electricity bills for the utility’s customers, on average, were 44% higher than in the same period the previous year.
“Recent studies have revealed that New Jersey residents are using energy more than ever before, causing equipment to work harder. This increased energy demand, coupled with inflation and extreme weather, are contributing factors affecting energy bills,” Womer said.
Lipman warned electricity prices could rise yet higher next year. PJM Interconnection, which transmits electricity across a region that covers 13 states and the District of Columbia, in late July reported bids came in nine times higher over the previous auction.
Those increases, which won’t hit ratepayers immediately, are expected to add roughly $15 to customers’ monthly electricity bills starting in February, Lipman said. PJM cited a decrease in electricity supply, increases in projected peak load, and federal rules to explain the high costs.
Other ratepayer costs imposed while electricity prices were low — like a $300 million annual subsidy to three South Jersey nuclear power plants that on average added $2.77 to customers’ monthly bills — contributed to hefty bills and have become less bearable as prices rose, Lipman said.
“When electricity was cheap, everyone said, ‘We have headroom,’” he said. “Like I said multiple times, it’s great that we have headroom, but when it comes down, our heads are going to go through the ceiling,”
The Board of Public Utilities in February approved an order that would suspend the nuclear subsidies beginning June 1, 2025.
Electrification, a cornerstone of Gov. Phil Murphy’s energy agenda, could also push up costs as increased load forces firms to upgrade grid infrastructure that delivers energy to homes, Lipman said.
Regulatory changes at the federal level could push down electricity prices.
Lipman said the state, alongside a coalition of others within PJM’s service area, planned to petition the Federal Energy Regulatory Commission for a rules change that would bring reliability must-run electricity plants back into the market. Their inclusion would increase the market’s energy supply and help control prices.
“Small amounts of megawatts can make a massive difference in the clearing price, and excluding them from the market was, in our opinion, a mistake. Putting them back in will make a big difference,” Lipman said.
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