Last week’s announcement of big rate hikes for New Jersey residents as a result of the latest electricity auction resulted in much finger-pointing at the PJM grid by the Murphy administration and others.
But the reality is that New Jersey’s all-out quest for all-electrification policies are the main thrust behind the increased rates, according to NJBIA Deputy Chief Government Affairs Officer Ray Cantor.
And, he says, it may get worse before it gets better.
“As we all know, this administration has been pushing electrification policies that drive up the use of electricity while at the same time adopting policies that have shut down generation and discouraged the development of clean natural gas facilities,” Cantor said.
“It’s simple economics that clearly demonstrate that increasing demand while decreasing supply will drive up prices.
“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 New Jersey residents and businesses. And so here we are.”
Utility providers in New Jersey annually purchase electricity supply through auctions. They are not permitted to profit from the sale of electricity supply and are required to provide it to ratepayers at cost.
Unfortunately for the Garden State, 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.
Starting June 1, the average monthly bill increase for New Jersey residents will be between 17.23% and 20.20%, depending on the service territory.
GRID KNOCK
PJM Interconnection is the grid operator for New Jersey and 12 other states and the District of Columbia, powering more than 65 million people.
PJM has come under criticism by Gov. Phil Murphy and others for the way basic generation service costs are structured, as well as auction rules that exclude generation capacity from being sold.
“Those criticisms are not without some merit,” Cantor acknowledged. “You can also look at the speed of which interconnection approvals are made by the Federal Energy Regulatory Commissions as a contributing factor.
“But they are not the major thrust beyond these price increases.”
Cantor said New Jersey is a net importer of power on the PJM grid system that relies heavily on fossil fuels.
At the same time, New Jersey, under Murphy, has a target to achieve 100% clean energy by 2035 mostly through offshore wind, solar expansion and other energy efficiency programs. And without natural gas or nuclear energy.
“The bottom line is we’re a state that doesn’t produce enough energy to keep our own lights on and we are advancing policies to eliminate sources that provide much of our electricity,” Cantor said. “That’s not a winning combination when it comes to the balance of supply and demand.
“And it will only get worse because there are no realistic plans in place to increase our in-state generation, while we all know that demand will continue to increase.”
AN INFLECTION POINT
President Donald Trump’s executive order last month calling for a temporary withdrawal of offshore wind leasing on the outer continental shelf from and a review of the government’s leasing and permitting practices for offshore wind, coupled with the Murphy administration’s recent decision to put a pause on financial backing of offshore wind projects, would seem to indicate that New Jersey will not reach its clean energy goals by 2035.
On the “Ask the Governor” program this week on News 12, however, Murphy still maintained offshore wind could be “a huge source of energy that would go directly toward rebalancing those electric bills.
“It would create thousands of building trades jobs. It’s clean. I’m prepared to explore options that put these (turbines) much farther out in the ocean so that the line-of-sight issues, either go away completely or they become de minimis,” Murphy said.
Cantor, as he originally stated when New Jersey’s Energy Master Plan was delivered in 2019, said all-electrification policy set under unrealistic deadlines will ultimately fail and result in higher electric bills.
“We support offshore wind, but you can’t put all of your eggs all in one basket when it comes to energy supply,” Cantor said. “As we’ve always said, you can’t forge unrealistic deadlines without a portfolio of energy sources. You can’t do it without nuclear or clean natural gas, especially with more electricity demand resulting from the increase in data centers.
“Whether it’s this administration changing its mind or the next administration charting a more realistic course with energy, our decarbonization efforts must be done pragmatically, not through ideology.”
