Dramatic spikes in New Jersey electricity bills over the summer stemmed from the combined effects of an unprecedented heat wave and recent rate increases, utility executives said at a state Assembly hearing. 

Electricity use in June and July shot up by 15 to 20% in some areas over the same period in 2023 in what the New Jersey Board of Public Utilities (BPU) said was the hottest June on record. 

The Oct. 2 Assembly hearing also spotlighted the need to better cope with the state’s growing need for electricity and how to bring new generation sources online to replace retired fossil fuel sources. 

The hearing came as Gov. Phil Murphy (D) pursues an aggressive energy policy centered on electricity and the development of 11 GW of offshore wind capacity. Republican lawmakers argue the state is moving too fast and should embrace a broader energy portfolio. 

The Assembly Telecommunications and Utilities Committee convened the hearing in response to widespread customer complaints about the sudden increase in the size of their bills. 

“I received countless calls from my constituents because they are seeing what I have been seeing — skyrocketing electric bills,” Assemblywoman Andrea Katz said in testimony to the committee. “I heard it from my neighbors, and I saw it on my own electric bill. Utilities like Exelon have seen their stocks up 10% over the last year, while at the same time, families in New Jersey are paying hundreds of dollars more a month for their electric bills. … And we all need answers.” 

BPU President Christine Guhl-Sadovy said the “main driver of the increases over the summer was an increase in usage.”  

Customer use across the four utilities that serve the state — PSEG, Jersey Central Power & Light, Atlantic City Electric (ACE) and Rockland Electric Co. — increased by 12 to 16% over the previous year, which was relatively cool with unusually low use, she said.  

In addition, she said, the BPU certified a rate hike that would increase the average customer bill by 5 to 8% due to electricity rates set in the Basic Generation Service (BGS) auction held by the four utility companies. 

Multiple Rate Hikes

Brian O. Lipman, director of the New Jersey Division of Rate Counsel, said the rate hike was one of several implemented by utilities that affected customers for whom, given the elevated temperatures, “air conditioning is no longer a luxury, it is life saving.” 

In testimony, and in a supporting letter to the committee, he said ACE had increased rates nine times since July 2023, and reduced rates four times, for a net overall increase. These included increases for transmission rates, infrastructure improvements, and prices set by the BGS results, which increased electricity supply rates by about $7.56 per month, he said.  

Even before the use increase, the average ACE ratepayer was paying about $23.64 more in June 2024 than a year earlier, Lipman said. 

Add during the heat wave and “the result is significantly higher bills for ACE customers in the summer of 2024 as compared to the summer of 2023,” he said in the letter. “This analysis does not only apply to ACE. I could go through the same analysis for PSE&G, JCP&L and Rockland Electric Co.” 

Speaking at the hearing, Phil Vavala, ACE’s regional president, said the average customer bill increased by 20%, part of which was due to the “pass-through” cost of electricity rates, which are set at the BGS auction. 

He said the company works to “empower customers to better manage their energy use.” That includes providing customers with programs that “help those who are struggling to meet their energy needs” and to deploy smart meters that enable customers to better monitor their energy use, he said. 

Electricity Demand Surge

Several speakers said the spike in customer bills showed the state has to address far larger systemic issues. 

“One of the main takeaways that we probably will all share today is that we do need more generation,” said Guhl-Sadovy, BPU president. “We, over the last couple of decades, have not seen a significant demand increase in energy use, in part because we’ve done a really good job in energy efficiency. And so we’ve helped to keep that demand flatter. But we have seen energy demand go up, and so we do need more generation.” 

BPU officials said at an Oct. 1 hearing into the agency’s offshore wind infrastructure solicitation that they expect demand for electricity in the state to increase by 15,000 GWh to 93,000 GWh by 2025. (See NJ Offshore Infrastructure Plans Spark Electro-Magnetic Fears.)  

Jason Stanek, executive director of PJM Interconnection, which serves 13 states, said the region is in the midst of a transition. 

“We’re seeing a tightening of supply and an increase in demand,” he said. “And they’re going in opposite directions relatively quickly.” 

He said the RTO’s load forecast released earlier in the year showed trend lines that were “head and shoulders above all prior years.” That increase stems in part from the rise in electric vehicle use and the emergence of commercial high-energy users such as data centers and artificial intelligence facilities, he said.   

An example of the challenge facing PJM, he said, is that in the 12 months prior to the summer of 2024, the RTO experienced 4,000 MW of generating source retirements, while peak demand rose by 4,000 MW.  

“So that’s an 8,000-MW difference in just a short period of 12 months,” said Stanek, adding that such a sudden increase in demand is difficult for PJM to handle. A shortfall in supply compared to demand can increase the price of electricity. That was demonstrated in the results released in July of the organization’s recent capacity market auction, which set electricity prices nearly 10 times higher than a year ago, he said. 

Stanek urged lawmakers to help PJM, and the region, better handle the ongoing demand surge by avoiding policies that are “designed to push resources off the system before we have an equal and equivalent amount of replacement resources.” 

At the same time, PJM is working through a backlog of customers waiting to connect new sources to the system, he said.