Electricity prices have risen dramatically across the nation over the last two years. New Jersey customers recently faced the steepest price increase nationally — a 16.9% surge, or roughly $260 per household — against a national average of 6%, according to data from Democrats on the Congressional Joint Economic Committee.

The spike reflects a perfect storm within the PJM Interconnection, where surging data center demand is reshaping the grid faster than new supply can catch up, driving capacity prices to historic highs. The Basic Generation Service auction’s wholesale market pressures quickly ripple into retail rates, underscoring how tightly linked the region’s energy costs are to evolving demand patterns.

The New Jersey Board of Public Utilities has been at the forefront of a counter-offensive addressing supply shortages, holding PJM accountable for flawed market rules and providing direct relief to New Jersey ratepayers while holding the state’s electric utilities accountable for costs on the distribution side.

New Jersey Gov. Mikie Sherrill has made affordability a cornerstone of her administration, signing Executive Orders 1 and 2 to accelerate clean energy procurement and grid modernization while evaluating the utility business model — directives that align with and reinforce the board’s core regulatory mission.

The BPU is executing that mission through three interconnected pillars, each already underway and now advancing with renewed urgency:

• The board has expanded access to bill assistance under the Universal Service Fund and extended bill credits to 3.9 million accounts using existing funding resources while continuing to press for additional relief tools as costs remain elevated.
• The BPU is working to boost supply and drive down prices by accelerating the deployment of storage and solar resources. 
• The board is working to reform wholesale markets and how utilities do business, including pushing for structural changes to PJM markets; investigating alternative ways of procuring power for retail customers through potential reforms to the BGS auctions; fighting unfair transmission cost allocations; and pressing to end transmission planning practices that fail to protect ratepayers. We have also begun tying portions of utility return on equity to performance metrics, shifting incentives toward customer outcomes rather than capital investment alone.

Regarding the second pillar, the most visible acceleration is occuring in energy storage. Energy storage is one of the few resources that has the short development timeline and capacity value needed to meaningfully affect near-term capacity prices.

The Garden State Energy Storage Program Tranche 1 recently awarded 355 MW across three transmission-scale projects, and Tranche 2 launched simultaneously for the remaining 645 MW of the 1,000 MW statutory mandate. BPU staff projects more than $169 million in ratepayer savings through increased capacity market competition from the three Tranche 1 projects.

All Tranche 1 projects are expected to achieve commercial operation by no later than 2028. In comparison, the current five-year-plus wait time for gas turbines means no newly proposed gas plant can be brought online and provide price relief to consumers until the 2030s.

For the past several years, the board has also been working to streamline the process under which distributed energy resources interconnect to the electric distribution system to resolve backlogs that were blocking the entry of new small-scale solar and storage resources. This culminated in a rulemaking, completed last year, that overhauled the board’s interconnection rules.

In February, the BPU pressed our electric distribution companies to implement these new rules as fast as possible by issuing a request for information that requires them to report on their implementation efforts and identify any potential actions the board could take to further speed the interconnection of new resources.

This technical “unblocking” is essential for the record 3-GW expansion of the Community Solar Energy Program, the largest single allocation in state history. The program guarantees 20% credit discounts for subscribers, with more than half of capacity and 25% bill credit discounts reserved for low-to-moderate income households. These retail savings help insulate vulnerable residents from the volatility of the broader wholesale market.

Under the third pillar, the BPU is pursuing utility business model modernization. In response to Executive Order 1, the Board approved a solicitation to engage a consultant to conduct the study — due within 180 days of the order — on modeling performance-based ratemaking, multi-year rate plans and securitization. This effort builds on recent actions that have begun to decouple utility earnings from throughput and capital spending.

A primary driver of this urgency is large load growth.

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Data centers have become a dominant force in PJM demand forecasts. Regulators in 36 states around the country are increasingly focused on ensuring these projects do not shift costs to residential customers. At PJM, the BPU is actively engaged in stakeholder proceedings aimed at managing the influx of large loads and bringing new capacity onto the regional system.

PJM must make these reforms in a manner that protects ratepayers from the costs and risks caused by the new large loads. On the state level, policymakers are currently weighing “bring-your-own-generation” requirements and revised retail cost allocation mechanisms to ensure that the infrastructure required by massive data loads is paid for by the beneficiaries, not the general ratepayer base.

Outside of large loads, transmission development has been driving cost increases in PJM and New Jersey over the last decade.

The board is active in this space. Most notably, alongside the Division of Rate Counsel and PSE&G, the BPU successfully challenged PJM’s “de minimis” transmission cost allocation rule before the Federal Energy Regulatory Commission. The rule had forced New Jersey customers to subsidize transmission beneficiaries elsewhere in the PJM footprint since 2015. FERC’s elimination of the rule and the order for refunds represent a major victory. Staff estimates point to hundreds of millions in refunds and tens of millions in annual forward savings.

The board is also pressing FERC to close loopholes that have allowed monopoly utilities to spend billions of ratepayer dollars on transmission projects without competition or meaningful regulatory review. Under current practice, FERC permits nearly all transmission spending in the PJM region to be recovered automatically through formula rates and shields that spending with a presumption of prudence. The board is launching a new advocacy effort at the commission to end that presumption for projects that never underwent an external review of need, and to add basic consumer protections.

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The through-line of New Jersey’s current strategy — spanning storage procurement, interconnection reform and federal litigation — is a commission operating every available lever at a pace calibrated to the urgency of ratepayer harm. For other PJM states watching the same cost pressures build, New Jersey’s docket record offers a detailed case study in what aggressive, state-led countermeasures look like in practice.

The structural problems of a regional market shaped by data-center load and federal failures in transmission oversight will not be resolved at the state level alone. But the New Jersey BPU has demonstrated that the toolkit available to a determined commission is broader than many once thought.