Assembly Democrats introduced legislation June 26 that would direct the Board of Public Utilities to work with neighboring states on alternatives to PJM Interconnection’s electricity capacity and transmission market.
PJM is currently the grid operator and whole electricity capacity market manager for 13 states and the District of Columbia. New Jersey is one of the states that are part of PJM’s regional transmission organization.
The bill would require the BPU to work with neighboring states to develop a multistate compact to replace the capacity market with a “fixed rate resource requirement model.” This is a model in which utilities recover their costs through regulated rates rather than the market. How it would work and what it would mean for New Jersey ratepayers is not clear from the bill’s language.
The bill also instructs the BPU to explore the feasibility of withdrawing from the PJM’s high-voltage electrical transmission grid entirely, either by joining a different regional system or establishing a New Jersey-led grid. The current PJM transition network is the largest regional network in the country, serving 65 million people. How a New Jersey-led grid would work given that the state is a net importer of electricity is also not clear from the bill’s language.
The legislation is yet another swipe at PJM by New Jersey officials, who publicly blame PJM for the supply and demand imbalance that is driving up electricity rates. The legislation is being introduced in the Assembly, where all 80 seats are on the ballot in November. The argument advanced by the Assembly Democrats is that PJM has been slow to resolve project backlogs that would bring added supply to the grid and ease the upward pressure on rates.
State Republicans have placed the blame for the electric power supply problems at the feet of the Murphy administration, which they accuse of having prematurely closed fossil fuel generation plants to meet their green energy goals before an adequate supply of alternative energy was available to replace what was lost with the plant closures.
They say Murphy and the Democrats in the Legislature repeatedly doubled down on the supply expectations from offshore wind projects even as those projects fell further behind schedule and the Danish firm Orsted withdrew from its commitments.
PJM for its part argues that the states and local governments have played a significant role in the backlog of energy projects ready for attachment to the grid with regulatory issues and problems with location of renewable energy efforts. PJM says the retirement of coal plants in New Jersey and the closing of one nuclear reactor before alternative sources were ready to replace them produced supply problems that drove up prices.
PJM also points to the fact that New Jersey is a net importer of electricity. The state’s failure to generate enough electricity to meet its consumption needs is, according to PJM, another factor that increases the state’s vulnerabilities to market pressures.
Nowhere in the announcement of the legislation by the Assembly Democrats was there any mention of the fact that offshore wind projects have not met scheduled generating capacity goals set by Murphy by executive orders. Murphy has blamed those who have impeded the development of offshore wind. Opponents of the wind farms have argued that New Jersey, with assistance from the federal government, rushed through impact studies ignoring harm to local economies and the environment.
Regardless of the reasons, renewable energy from offshore wind is well behind the schedule set for it, and the fossil fuel generators were closed anyway. This leaves New Jersey vulnerable to the argument that state policies have contributed to the supply imbalance that state officials blame PJM for.
Speaking about the legislation, Assemblywoman Lisa Swain (D-Bergen) said, “This bill represents a collaborative effort among states that have been failed by PJM to identify an electric load utility capable of reliably meeting our energy needs without imposing additional financial burdens on our residents.”
Swain and the bill’s other sponsor, Assemblyman Dave Baily (D-Gloucester, Salem, Cumberland) said, “As we continue to work toward a more affordable and reliable energy future here in New Jersey, it has become increasingly clear that we must work together with our neighboring states to make it happen.”
New, higher supply rates for electricity went into effect in New Jersey June 1.
Contact the reporter, Vince Conti, at vconti@cmcherald.com.
