New Jersey residents are bracing for steep electricity price hikes over the next two years – 25% to 35% increases that far exceed the modest rise triggered by last month’s PJM capacity auction. While headlines focused on the auction’s impact, the bigger story is a policy-driven shift that prioritized shutting down reliable energy sources before replacements were ready.
The PJM capacity auction, which sets the price utilities pay to reserve future power, is expected to add about 1.5% to 5% to residential bills beginning in 2026. But that is only a small part of a much larger rate surge already underway.
In fact, Atlantic City Electric customers saw double-digit increases in the supply portion of their bill beginning June 1. Additional increases are expected in delivery charges, transmission upgrades and renewable energy program fees.
Policy Made This Worse
Some of the pressure comes from growing demand – from electric vehicles, expanding air-conditioning use and an explosion of data centers. But the larger issue is supply: New Jersey’s in-state energy production is shrinking due to policy decisions.
A major turning point came in 2018 with the closure of the Oyster Creek Nuclear Generating Station. The plant shut down 11 years before its federal license expired – not because it failed, but because the New Jersey Department of Environmental Protection demanded costly cooling system upgrades. Rather than invest hundreds of millions, Exelon chose to shutter the plant, removing 636 megawatts of carbon-free, always-on electricity from the grid.
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We shut down reliable power before replacements were ready.
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Other fossil fuel plants followed. Five non-nuclear plants have closed in recent years, largely due to rising compliance costs and regulatory obstacles. Notably, the B.L. England Generating Station at Beesley’s Point closed in 2019. Although there were plans to convert it to natural gas, a critical pipeline was blocked by state regulators and local opposition due to its planned route through the Pinelands. As a result, another source of dependable electricity disappeared without replacement.
Billions Spent, Zero Kilowatts Delivered
At the same time, New Jersey went all-in on offshore wind. The state committed more than $3 billion in public funds for ports, workforce training and offshore transmission infrastructure. A large portion of that was tied to Ørsted’s Ocean Wind 1 project, projected to deliver more than 1,100 megawatts of renewable power.
But in October 2023, Ørsted abruptly canceled the project, citing inflation and supply chain challenges. The company forfeited a $125 million performance guarantee, and New Jersey was left with no power in return for its investment.
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New Jersey is now paying more for less—and the bill is about to get even bigger.
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Importantly, local opposition also played a role in the delays and legal entanglements that slowed the project. Concerns about cost, reliability, ocean views and marine impacts were raised by coastal communities and advocacy groups. While these objections may have been justified, the result is that New Jersey ratepayers and taxpayers have spent billions with no electricity to show for it.
Although offshore wind costs have not yet been fully added to electricity bills, they are already being absorbed through state budgets and ratepayer-funded authorities. The turbines were never built, but the money spent on infrastructure and planning is gone.
Out of Power, and out of State
New Jersey is now a net importer of electricity, making the state increasingly dependent on out-of-state sources. As in-state generation declines, New Jersey buys more energy on the open market, exposing ratepayers to volatility and regional price spikes, especially during peak demand periods.
Meanwhile, states such as Idaho, Washington and Louisiana enjoy residential electricity rates below 12 cents per kilowatt hour. In New Jersey, rates range from 19 to 21 cents, among the highest in the continental United States. By 2027, that gap is expected to widen further.
A System Strained by Its Own Choices
New Jersey’s electricity prices didn’t rise by accident. They are the result of deliberate choices that favored environmental goals over energy readiness. In an effort to lead on climate change, the state shut down reliable power plants before replacements were built. It blocked natural gas infrastructure that could have kept costs lower. And it poured billions into renewable projects that ultimately collapsed.
The consequence? New Jerseyans are paying more for less, and those bills are about to get even bigger.
Creation of this article was aided by search-engine and AI tools.
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