The state Board of Public Utilities has approved a 17% increase in the supply component of consumers’ electricity bills, effective June 1 for the year 2025-2026.
The supply component typically is about 42% of a customer’s bill, Atlantic City Electric officials have said.
The increase will come just as Cape May County enters the summer season, when electricity usage increases, and after Atlantic City Electric, which does not control the supply costs, asked the BPU for an 8% increase in distribution rates, a separate component of a consumer’s bill that the utility does control.
A decision on that request was deferred by the BPU until April.
The BPU announcement of the 17% rate increase quotes the New Jersey Rate Counsel’s concern that the new rates will have “a substantial impact on New Jersey families and businesses.” The state Division of the Rate Counsel’s mission is listed as one of advocacy for consumers.
To illustrate the point, a chart included in the BPU announcement showed that the average Atlantic City Electric customer, using 650 kilowatt hours a month, would see the bill for that usage go from $162.60 to $190.62, with the latter figure being the highest of the state’s four distribution companies.
“We knew this was coming,” Rate Counsel Brian Lipman said. He urged policymakers to review “all the subsidies that ratepayers are paying for,” referring to state-defined subsidies for things like electric vehicles and solar programs.
“We need a nuts-to-bolts evaluation and figure out where we can start cutting, because ratepayer bills are extremely high,” Lipman said.
The BPU’s rate hike statement makes clear how little regulatory oversight the agency has when it comes to the cost of electricity supply. The supply prices are basically set by the annual wholesale auctions conducted by the PJM Interconnection, the grid operator for 13 states including New Jersey.
According to the BPU statement, “The NJBPU’s authority over the auction is limited to certifying the results as consistent with market trends and does not extend to influence pricing.” In effect, the BPU has no authority to do anything with supply pricing except approve the rates that result from the auction.
The announcement says that the state’s four electricity distribution companies make no profit off the supply rates and pass them “through directly to ratepayers.”
Last month Gov. Phil Murphy and the BPU announced with fanfare an agreement with PJM Interconnection that places a cap on price hikes over a two-year period. But that agreement does not go into effect until this June’s auction, whose effects are felt the following June.
Because electricity supply prices are set by the annual auctions, the BPU statement says there are limited options to reduce electricity costs through June 2026.
Rep. Jeff Van Drew (R-2), who has made electricity pricing an issue in which he is deeply involved, called for the resignation of the entire Board of Public Utilities after the board approved the supply price increase.
Van Drew said, “The NJBPU has failed the people of New Jersey. For years they knew these rate hikes were coming, yet instead of working to protect consumers, they wasted time pushing their Green New Deal agenda.”
A separate portion of a ratepayer’s monthly bill is composed of charges for the distribution of the supply to homes. This is the portion of the cost that goes directly to the distribution company, in the case of Cape May County, Atlantic City Electric.
ACE has already requested an 8% increase in distribution rates for 2025, saying that the increase would allow it to recover the cost of capital investment already expended in making the ACE service area more resilient and less prone to outages. If ultimately approved by the BPU, the hike in the distribution rates would be additional to the supply rate increase just approved.
The offshore wind industry argues that the electricity supply and demand problem is the result of ill-conceived attacks on renewable sources of energy like offshore wind that have resulted in slower supply growth, even in the face of growing demand.
Paulina O’Connor, executive director of the Offshore Wind Alliance, said in a statement, “Domestically produced offshore wind – made by American workers, for Americans – is the very thing that can combat New Jersey’s energy crisis, by creating price stability and improving grid reliability.”
The state’s residents do have the option to choose their electricity supplier through the Electric Deregulation and Energy Competition Act. This law allows customers to buy electricity from a third party, rather than their local utility company. The customer ultimately must determine if a change in supplier would be beneficial. All consumers in South Jersey must, however, use Atlantic City Electric for distribution to the home.
Contact the reporter, Vince Conti, at vconti@cmcherald.com.
