The lines drawn in the blame game for New Jersey’s big energy rate increases have been clearly defined for weeks.
Republicans say they’ve been predicting these added costs since Gov. Phil Murphy dropped his 2019 Energy Master Plan that called for all-electrification policies and reduction of natural gas energy.
Democrats have fingered PJM Interconnection., the grid operator for New Jersey and 12 other states and the District of Columbia, from everything to the auction rules for the energy being sold, to the time it takes to approve projects, to how it picks its board of directors.
On Friday, both sides got to speak their piece at a special joint committee at the Statehouse to discuss affordability and energy.
But so did PJM.
Asim Haque, senior vice president of governmental and member services, testified that indeed New Jersey’s energy policies have resulted in the state’s energy increases, but also added context and responses to other complaints about PJM.
“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,” Haque told lawmakers.
“As demand is going up, supply is going down. Supply is coming off the system due primarily to decarbonization policies and some economics.”
STICKER SHOCK
Last month, the winning prices for New Jersey’s 24th annual electricity auction for Basic Generation Service (BGS) increased for all four regulated electric distribution companies (EDCs) in the state.
As a result, the average monthly bill increase for New Jersey residents will be between 17.23% and 20.20%, depending on the service territory, starting on June 1.
New Jersey, under Gov. Murphy, has had a target to achieve 100% clean energy by 2035 mostly through offshore wind, solar expansion and other energy efficiency programs. But without adding natural gas or really championing nuclear energy.
“We have continuously warned that creating policies that set artificial deadlines for actions and discouraging new generation from sources that include natural gas, nuclear, as well as other renewables, will result in much higher energy prices for our residents and businesses,” said NJBIA Deputy Chief Government Affairs Officer Ray Cantor.
Those sentiments were echoed by Republicans on the committee.
“I’m disappointed that we’re here today, especially in light of the fact that people have been sounding this alarm for five years,” said Senate Republican Leader Anthony Bucco (R-25). “And it seemed like those alarms went on deaf ears, and now we’re here scrambling because people are not going to be able to pay their bills this summer. And that’s a shame.”
“We can’t afford to be the California of the East Coast,” added Republican Senator Whip Mike Testa (R-1). “I mean that because we see about the rolling brownouts they have throughout the state of California. I have no clue why anyone would want to mimic policies that lead to rolling brownouts. That seems like what we’ve been kind of going all in on, to use a poker term, with our energy policies here in New Jersey.”
PJM-O?
Haque was grilled by Sen. Bob Smith (D-17), who serves as chair of the Senate Environment and Energy Committee and has been a strong supporter of Murphy’s Energy Master Plan.
Smith contended that because PJM could not accurately report a clear number of upcoming data centers, which utilize a great amount of energy, that the auction that led to New Jersey’s large rate increase was a “scam” and should be invalidated.
“There needs to be an investigation of your policies at PJM,” Smith told Haque. “If you’re not basing it on factual data, if you don’t know for a fact that these AI data centers are coming into the market, why are you imposing potential preemptive rate increases on our ratepayers?”
Haque acknowledged other states had expressed similar concerns and there “are ways to better gate whether these data centers are real.”
“We characterize our forecast as a long-term forecast,” Haque said. “It’s multiple years out. As we get closer to running these auctions for the actual delivery year, those numbers continue to firm up.
“The numbers we get are from the boots on the ground. The distribution utilities then say, ‘Here who has actually come into us to say we now need to construct.’
Smith also suggested there may be some sort of collusion among PJM’s board members and other grid operators to not prioritize renewable energy.
Haque respectfully refuted the suggestion and added that there was actually great value in offshore wind power if it could ever be brought online in New Jersey.
“We are not an anti-clean energy organization,” he said. “We are very happy to have all of these renewable resources that have cleared the queue or that are in our queue to connect to the system. We actually very much need those watts.
“Offshore wind is actually a really reliable resource of energy, if functioning. It would be a great addition to the system.”
POST-MORTEM
Following the hearing, both Democrats and Republicans from the committee continued the blame game.
Sen. John Burzichelli (D-3) said PJM’s “fundamentally flawed energy auction let us down” and that “their interests are not the same as the ratepayers.”
Sen. Paul Sarlo (D-36), who co-chaired the committee, said during the hearing that “the storms are going to keep coming, and we need to look at renewable energies,” but also added, “we can’t just sit idle for the next five to seven years and not open our eyes to other concepts.”
Sarlo, however, also laid blame at PJM’s feet in a statement afterwards.
“As we work to understand why energy costs have spiked, today’s hearing makes one thing clear: Among the leading causes are PJM’s broken capacity auction system and its failure to bring new energy supplies online,” he said.
Republicans countered that the responsibility of the higher energy prices lie solely at the feet of the leadership in Trenton during Murphy’s tenure.
“While the Democrats would like to put the blame on everyone but themselves, that fact of the matter is they’ve had control of this Statehouse for eight years now,” said Senate Minority Leader Bucco. “The policies that they’ve implemented, moving New Jersey to complete electrification in a short period of time, has increased demand and the supply side couldn’t keep up.”
“The Democratic leadership in Trenton has gone along with Governor Murphy’s plan to decommission nuclear and coal and phase out natural gas by banning future sales of gas cars, stoves, heaters, you name it,” added Senator Latham Tiver (R-8). “Of course, prices are going to skyrocket. It is basic supply and demand.
“I think the other side of the aisle is spending more time trying to change the narrative,” said Assemblyman Alex Sauickie (R-12).
