The basics:

• New Jersey is facing a major spike in utility bills, with electric rates expected to rise nearly 20% in June 2025.
• State lawmakers recently held a special hearing to investigate the issue, hearing testimony from experts, advocates and other key stakeholders.
• Efforts are underway to address the crisis, including regional grid operator PJM’s new collaboration to streamline projects using AI.

A recent hearing in Trenton highlighted an issue that has dominated residents’ peace of mind – and headlines: the spike in utility costs here in the Garden State.

That issue gained during a heatwave last summer, as New Jerseyans reported seeing major jumps in their monthly bills and is coming to a head in 2025. This June, ratepayers will face a nearly 20% increase that stems from the results of the most recent Basic Generation Service auction.

To put it simply, there is a major imbalance in the supply and demand for electricity.

And that reality has led to a lot of finger-pointing and calls for action.

To look into the issue, a special Senate Select Committee was formed, along with the Assembly Telecommunications and Utilities Committee, held a special hearing March 28 in Trenton to hear testimony from experts, advocates and other key stakeholders.

“With New Jersey’s residents and businesses experiencing surging energy costs, committees from both houses of the Legislature will work together to investigate the recent spike in rates and examine the factors contributing to the rising costs,” said Sen. Paul Sarlo, D-36th District, chair of the Senate Select Committee. “Utilities are basic necessities in our daily lives, and we need to undertake a comprehensive assessment.”

“This issue is about more than just rising utility costs; it’s about creating a future where all New Jerseyans, regardless of their income or location, can access the energy they need to live, work, and thrive without fear of being priced out,” said Assemblyman Wayne DeAngelo, D-14th District, chair of the Assembly Telecommunications and Utilities Committee. “At the end of the day, we must do everything in our power to ensure that no one is left without answers or support in this time of need.

That hearing included testimony from New Jersey Board of Public Utilities President Christine Guhl-Sadovy.

“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,” she said in her written testimony.

“The other portion of your electric bill is related to supply changes 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.”

The NJBPU president noted how New Jersey is part of PJM Interconnection – a regional transmission operator that manages the grid in this and 12 other states – and pointed to the most recent auction results.

“In February, the Board recently announced the results of the Basic Generation Service auction, which concluded with rate increase that will take effect in June of this year ranging from approximately 17%-20% on the average electric customer bill,” she said. “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.”

The Murphy administration and Democrats in the Legislature have taken aim at PJM, criticizing the grid operator in several areas.

“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,” said Guhl-Sadovy. “Most recently, PJM once again changed the way they model for available capacity which is expected to drive auction prices even higher.”

Complaints have also targeted PJM’s backlog of energy projects that are pending approval.

“The numbers tell the story. PJM currently has around 1,600 energy projects stuck in its interconnection queue, 79 of them in New Jersey alone. A staggering 98% of those are clean energy resources,” said Sarlo; Senate Majority Leader Teresa Ruiz, D-29th District; and other members of the Senate Select Committee in a March 28 statement after the hearing.

“Collectively, they represent 250,000 megawatts of potential capacity. If even a fraction of these had been connected in a timely manner, supply would have more than doubled the volume that cleared the last capacity auction, helping to keep prices within historical norms. Estimates suggest that if just 30% of the queued projects had been operational, the last auction could have been 63% cheaper.”

‘Nobody saw this coming’

PJM Senior Vice President – Governmental and Member Services Asim Haque also testified at the hearing. He offered perspective from the regional grid operator about the situation.

“Our industry can be quite complicated,” said Haque. “There is a – we’ll just characterize it as a major issue right now that many of you have already touched on, which is not that complicated. And that is the supply/demand fundamentals that we’re experiencing on the system right now. Demand is increasing due primarily to the proliferation of data centers, but also due to electrification – as well as the onshoring of the U.S. manufacturing industry.

“And I do want to reiterate something that was referenced by President Guhl-Sadovy, which is this major uptick in demand – if we’re all being very truthful with one another, nobody saw this coming. We certainly saw the supply/imbalance sort of changing many years ago.”

Demand is increasing due primarily to the proliferation of data centers, but also due to electrification – as well as the onshoring of the U.S. manufacturing industry.
– Asim Haque, PJM Interconnection

He noted how he testified in Trenton multiple times over the years and had said very similar things around concerns about diminishing supply with some level of frequency. “But the demand increase, in particular, this uptick, is something that is a newer phenomenon.”

Haque also defended PJM against criticisms that it is just altering market conditions with no oversight.

“We are by no means a monolith,” he said, pointing to PJM’s regulator, the Federal Energy Regulatory Commission. “So, we don’t just like hang out in Pennsylvania – and just do what we want.”

Republicans, however, point the finger at the Murphy administration, Democrats and their policies.

“I think what we learned today is that despite the warnings from various industry experts, PJM, and the rate counsel, this failed energy policy from the administration and the Democrat-controlled Legislature is causing rates to go up and our residents are going to feel it,” said Senate Republican Leader Anthony Bucco, R-25th District, a member of the Senate Select Committee. “You heard the rate counsel say that if these energy prices go so high that people will have to start making decisions that could seriously impact their health. That’s not where New Jersey needs to be, not when these warnings have been given over the last five years, not just by Republicans but by folks who deal with these industries every day.”

Sen. Mike Testa, R-1st District, and also a member of the Senate Select Committee, said that his party saw today’s reality happening from a mile away.

“We called the Energy Master Plan the Energy ‘Disaster’ Plan. We knew that going all in on offshore wind was a really bad idea – but instead we went with really bad, expensive, intermittent forms of energy that are going to be placed on the backs of the taxpayers and the ratepayers of New Jersey,” said Testa. “Make no mistake, Gov. Murphy and all the members of his cabinet promised every single New Jerseyan that they would make New Jersey the California of the East Coast; well folks – the chickens have come home to roost.”

“Drastic and unconscionable utility rate increases in both electricity and natural gas have created a full-blown crisis in New Jersey,” said Republican lawmakers from the 9th District, Sen. Carmen Amato Jr., Assemblyman Brian Rumpf and Assemblyman Gregory Myhre, in written testimony for the joint hearing. “The fact that this committee hearing has been convened is a testament to this standing reality.”

Looking for answers

Gov. Phil Murphy was asked about the situation during his recent radio call-in show on WNYC by host Nancy Solomon.

“PJM is the central problem here. They may not be the only problem – I’ll give you some others, but they are the central problem,” said Murphy. “I asked my team to tell me the backlog – 1,600 projects, come on guys. We’re getting crushed by this. In fact, I’m in the process of calling in the top folks at PJM into my office and we’re going to have a tough discussion.”

Murphy then pointed to “other culprits” on the issue.

“Pushing off offshore wind is flat out stupid,” said Murphy. (See “With new Trump term, NJ’s offshore wind sector faces dark future”)

“I also want folks to know that we are looking in the mirror ourselves to see what else we could be doing to address costs, to deliver relief within the four walls of New Jersey. Got nothing to report tonight, but that’s something that we’re looking very, very hard at,” said Murphy. “And we’re turning over every stone. But PJM is centerstage on the problem right now. And it’s probably the number of projects which I referred to. It’s probably, also, Nancy, to your fair point – the way that they go about doing business and approving projects.

“But the currently state of affairs is completely and utterly unacceptable.”

During the hearing, Haque noted that the backlog was a result of a number of smaller and more renewable projects that sought to connect to its grid – versus past projects which tended to be larger. That reality, he said, increased the backlog.

Deploying AI

Toward reducing that inventory, PJM announced April 10 a multiyear collaboration with Google and Tapestry to deploy AI-enhanced tools to streamline its planning process for connecting new generation resources to the grid. Those organizations say that the effort is aimed at significantly cutting processing times for reviewing new applications – allowing a large volumes of requests to be process quickly and accurately.

“Innovation will be critical to meeting the demands on the future grid, and we’re leveraging some of the world’s best capabilities with these cutting-edge tools to further reduce completion times for New Service Requests,” said Aftab Khan, PJM executive vice president – Operations, Planning, & Security. “PJM is committed to bringing new generation onto the system as quickly and reliably as possible.”

“This initiative brings together our most advanced technologies to help solve one of the greatest challenges of the AI era – evolving our electricity systems to meet this moment,” said Amanda Peterson Corio, head of data center energy for Google. “We see the opportunity to help secure America’s electricity needs with the many resources seeking to provide energy to the grid – and believe this work with PJM is a great catalyst for innovation across the United States.”

In a statement to NJBIZ, PJM said it is working expeditiously to bring more supply onto the system, and the initial results are promising.

“Our one-time Reliability Resource Initiative to bring 50 shovel-ready, reliable generation projects online to meet immediate reliability needs received 94 applicants,” PJM told NJBIZ.

“PJM’s generation interconnection reform transition period, also approved by FERC, is nearing completion. We have approximately 67,000 MW in projects left to clear through our interconnection reform process out of approximately 200,000 MW.

“Those 67 GW will be processed this year and next. PJM’s announcement with Google and Tapestry is another example of efforts underway to better automate and further speed the interconnection process to bring more resources onto the system.”

The company also noted that there 50 gigawatts of projects that cleared its process – but have been delayed by issues faced by the developers.

PJM added that this current supply/demand imbalance is not unique to New Jersey.

“They are occurring across our footprint, in the rest of the country and around the world,” PJM said. “The issue in New Jersey is particularly acute, though, because the state imports approximately 35% of its power annually. That is why, in the testimony, Asim Haque, PJM’s Senior Vice President of Governmental and Member Services, presented, he noted that the state should place a moratorium on any policy that pushes current generation resources off the system at the same time as it works to streamline processes that will help to get new generation built and online quickly.”

Changes afoot

And just last week, another notable development. PJM announced that President and CEO Manu Asthana will step down from his role at the end of this year, continuing to serve as a senior advisor to the PJM board through June 2026.

“My five-plus years at the helm of PJM have been some of the most fulfilling of my career,” said Asthana in an April 14 press release. “I am especially appreciative of the opportunity to have led PJM’s remarkably talented, diligent and committed people, who work hard every day to keep the power flowing for 67 million people.”

“The PJM board is grateful to Manu for his strong leadership during a time of tremendous change in the electricity industry. Under his leadership, PJM successfully navigated the COVID-19 pandemic, significant market reforms, interconnection process enhancements, the buildout of a robust risk management function, and the delivery of world-class grid reliability through a variety of extreme weather events,” said PJM Board Chair Mark Takahashi.

In response to the news of the PJM leader’s departure, Sen. John Burzichelli, D-3rd District, said it offers an opportunity “for the organization that determines our utility rates to reform its practices to prevent the spikes in electric bills that have been imposed on New Jersey ratepayers.”

“Hopefully, this signals a change in priorities that will make consumer affordability the principal goal,” said Burzichelli in an April 15 statement. “As the disastrous results of the latest energy auction show, the current system is broken. I urge PJM officials to start immediately focusing on consumer-friendly reforms. I wish the departing president well. Perhaps he could do ratepayers a favor and take PJM’s auction results with him so they can start over.”

Bucco reiterated the Republicans position about who to blame for energy bill spikes.

“Don’t be misled by the claims from Trenton Democrats that PJM is solely to blame for soaring energy costs. The real issue is that we won’t be able to bring new energy sources online fast enough to cut energy costs unless the administration changes its current energy policies,” said Bucco. “No investor is going to commit to traditional energy solutions in New Jersey with its hostile permitting and unrealistic mandates for full electrification by 2035.”

The Senate Republican leader said that the current solar and wind plans won’t be implemented quickly enough – and even when they do, won’t meet demand.

“Under Gov. Murphy’s Energy Master Plan, New Jersey will be forced to rely on the grid, which will drive prices even higher and force us to buy energy from the dirtiest sources in the region,” said Bucco. “This approach is simply unsustainable; the results are predictable – and the policy has never made sense.”

The complex issue – with many different viewpoints – is sure to ratchet up as price increases take effect and the summer heat follows. It remains one of, if not, the hot button issue here in the great Garden State. Stay tuned.