The increase in consumer electricity bills is a topic getting considerable attention in the media and at the New Jersey General Assembly. The issue is a serious one and is worthy of this attention. Higher electricity bills for families and businesses in New Jersey are never welcome, especially for folks already struggling to make ends meet.

PJM Interconnection is the regional grid operator for New Jersey, 12 other states and Washington, D.C. Our core mission is to keep the lights on for the 67 million consumers in our region. We act like an air traffic controller, maneuvering electricity through outages and storms across a multistate grid to match supply and demand in real time. We make sure, every second of every day, that your local utility has the power it needs to deliver it to your homes and businesses.

Also importantly, PJM is not a profit-driven organization: We have no profit motive, no shareholders and no share price. We are fully regulated by the Federal Energy Regulatory Commission and cannot make any major changes to how we operate unless we have that body’s approval. We have no motivation other than to utilize our engineering expertise to keep the lights on and provide value to consumers. As such, we hope to cut through the political rhetoric to help explain why bills are increasing.

Your electric bill consists of three primary components:

The first involves the delivery of power to your home or business from your local utility.

The second component is the sum of all the clean programs that the state has authorized. The charges for both of these components are overseen by the New Jersey Board of Public Utilities and do not involve PJM.

The third component involves the creation and transmission of power to your local utility. That’s where PJM enters the equation.

Part of how we maintain reliable electric service is by competitively procuring power across our footprint to meet a demand forecast. This is getting more expensive, and the reason is very simple. Supply is decreasing on the system and demand is increasing.

Power plants that generate electricity are retiring due primarily to state and federal decarbonization policies and some economic pressures. Simultaneously, demand is increasing due to the power requirements of artificial intelligence, data centers, electrification and a resurgence in U.S. manufacturing. When supply decreases and demand increases in any market, other things being equal, the result is an increase in pricing.

National issue, local concerns

This is a national issue, but in New Jersey, this supply/demand imbalance is especially stark. Demand is projected to increase meaningfully over the next few years. While that is good news for the New Jersey economy, the state doesn’t have nearly enough supply to serve that demand.

New Jersey has been shutting down existing resources to meet decarbonization objectives and it is currently importing more than 35% of its power from its neighbors. This ordinarily would not be a problem, were it not for multiple states advancing down this same path, creating a collective supply/demand crunch across our entire footprint leading to higher pricing.

Compounding the issue is the fact that New Jersey invested heavily in the construction of offshore wind for new supply, and this supply did not materialize. We worked hard with New Jersey officials – productively and in good faith – to prepare for the connection of these wind turbines to the grid. These turbines could have helped to alleviate our supply/demand imbalance and resultant pricing, but their delay in materializing has nothing to do with PJM. For those with whom we’ve worked closely with on that effort to now try to shift the blame to our organization for price increases is disappointing, to say the least.

‘Consumers deserve better’

PJM has also been accused of an unwillingness or inability to connect new renewable resources to the grid. PJM reformed its processes in 2022 so that we could safely and more efficiently connect these many smaller renewable resources. We have a decision from the Federal Energy Regulatory Commission to prove it. Organizations “informing” politicians about this issue are knowingly propagating a fallacy, producing studies funded by unknown entities with outlandish assumptions and conclusions to push blame to our organization.

The fact is that PJM has been processing hundreds of these projects through our study processes and will continue to do so. These resources are welcome additions to the grid but are currently having their own challenges in constructing. We should be looking closely at the reasons for some of these challenges and attempting to help these developers put steel in the ground.

PJM has been warning of our supply and demand concerns for some years now.

The power grid is a machine governed by the principles of engineering, mathematics and economics. Policy, even well intended, has to be grounded in these principles. Shifting blame to a profit-neutral grid operator who cares deeply about its mission to keep the lights on is one way to approach this issue. But consumers deserve better.

At PJM, we will continue to do everything in our power to work with all our states, including New Jersey, to help address what has become a national issue to keep the lights on and to try and do it cost-effectively for families and businesses.

Asim Haque is senior vice president, Governmental and Member Services, for PJM Interconnection.