Rate-setting electricity auctions held this week and in July will add between $22 and $28 to average customer bills starting in June. (Amalie Hindash for New Jersey Monitor)
The price of electricity is set to soar this June after successive electricity auctions yielded results that could boost bills by more than $25 a month.
The Board of Public Utilities on Wednesday approved the results of a Monday electricity auction, green-lighting prices driven higher by growing demand for electricity.
“No one likes to see bill increases,” said Christine Guhl-Sadovy, the board’s president. “We understand that, and we are committed to doing everything we can at this department to ensure we’re keeping prices as low as possible.”
Guhl-Sadovy said increases in demand and lower supply contributed to the higher auction prices.
In New Jersey, utilities annually buy electricity supply through auctions. Utility providers can’t profit from the sale of electricity supply and must provide it to ratepayers at cost.
Rate Counsel Brian Lipman, whose offices advocates for ratepayers on utility matters, said the increases would add between $22.67 and $28.02 to the bill of an average customer using roughly 650 kilowatt-hours per month, depending on their utility provider.
Jersey Central Power & Light customers will see the smallest increases as a result of the auction, while Atlantic City Electric customers will see the largest. PSE&G customers can expect a 650-kWh bill to be $26.87 higher beginning June 1, while ratepayers with Rockland Electric would see monthly bills rise by $25.48.
As a result of the auctions, the price of electric supply will rise by between 33% and 35%. Because electric supply costs account for only a portion of customers’ utility bills, ratepayers’ total monthly bills will see smaller increases of between 17% and 20%, depending on their utility provider, Lipman said.
Auction prices were higher than expected, he added.
“We knew this was coming. We knew a big increase was coming, and it’s concerning. People in [Atlantic City Electric] territory, for example, are calling every day complaining about their bills, and they’re about to see a $28-per-month increase on top of what they’re already paying,” Lipman said.
The impact of this year’s higher auction prices is exacerbated by the way basic generation service costs are structured.
Electric supply costs are set by a three-year average of auction prices, and this year’s high rates will phase out cheaper electricity auctioned in 2022 from the average, driving overall electric supply costs upward.
“We’re going to keep these high prices for three years, but it’s one-third of the mix, so if we can make it such that they go down, that would really help a lot,” Lipman said.
The high basic generation service auction prices come months after a separate electric capacity auction run by PJM Interconnection — the grid operator for New Jersey and 12 other states — saw electric capacity prices reach record totals, increasing by roughly 800% over the previous year.
Officials have said auction rules that excluded some generation capacity from sale helped push prices upward. The Federal Energy Regulatory Commission on Tuesday approved rule changes proposed by PJM to speed interconnection approvals and add some excluded capacity to its grid.
Lipman, echoing comments he made during an October legislative hearing on soaring electric bills, said legislators and regulators need to prioritize boosting electric capacity and limiting utility mandates that boost customer bills.
“I think you could look at all the subsidies ratepayers are paying for,” Lipman said. “Whether it’s for electric vehicles, for solar, I think we need a nuts-to-bolts evaluation and figure out where we can start cutting because ratepayer bills are extremely high.”
He added the state should reexamine ongoing utility infrastructure projects to determine whether any could be delayed as a cost-saving measure.
“We need to be a lot more thoughtful as we’re telling the utilities what they have to do, because we need to remember that every time the utilities do something, they’re going to want to recover whatever that is in ratepayer bills,” he said.
Because electricity prices are set by annual auctions, regulators and legislators have limited options to reduce electricity costs through June 2026.
Zenon Christodoulou, a commissioner on the Board of Public Utilities, said he hopes the present high demand for electricity would encourage investments that eventually drive prices down.
“The encouraging news is that these market forces and signals will encourage people to invest, which will inevitably have the effect of lowering prices as capacity increases and as generation follows suit,” he said.
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