Three consumer advocates have asked a federal agency to set aside an electricity auction that will lead to a 17% increase in the supply portion of residents’ power bills in June.
The three advocates filing the complaint with the Federal Energy Regulatory Commission include Brian Lipman, director of the New Jersey Division of Rate Counsel, who joined advocates from Illinois and Maryland in the action.
The three complainants are asking that the FERC find that the 2025-26 delivery auction of the PJM Interconnection, the electricity grid operator for all or parts of 13 states, including New Jersey, “produced unjust and unreasonable results” and that those results will impose on consumers “massively inflated charges without any corresponding reliability benefit.”
They ask that a new auction be held to establish “just and reasonable replacement rates.”
The complaint asks for a fast-track process since the new rates based on the result of the PJM 2024 auction go into effect June 1. If the process of acting on the request spills over into the new delivery year, the complaint requests a “refund effective date” to return excess payments to consumers.
The complaint states that redoing the last capacity auction, held in 2024, could result in $5 billion in consumer refunds.
The electricity utility world was rocked in July 2024 when the results of that auction saw total capacity costs jump to $14.7 billion from $2.2 billion in the previous auction. The rate hikes headed to consumer bills beginning this June 1 are a consequence of that auction.
The PJM results led to federal and state legislative hearings and repeated calls from ratepayers for relief. PJM received letters from a series of governors, Phil Murphy among them, and put forward a proposal for a rate cap and rate floor beginning with the auction for the 2026-2027 delivery year.
A complaint challenging those proposed caps was filed with the FERC from a power generator, LS Power Development. That complaint and the new one by the advocates leaves FERC with opposition on all sides of the auction issue.
In its complaint LS Power said, “It is impossible for market participants to have confidence in PJM’s markets and stakeholder proceedings if PJM is willing to repeatedly and unilaterally upend its market rules in response to externalities, with little to no deliberation with stakeholders.” There has been no public word on FERC’s handling of that March 17 filing.
The three advocates contend that the soaring rates are due to flawed market rules rather than a lack of electricity supply. In that position they counter arguments from a number of state politicians from both parties who have focused on the need to bring more power online quickly.
The new complaint posits that the market can respond to appropriate rules in ways that will lower prices substantially without waiting for new power generation.
FERC is reviewing the complaint and had no immediate comment, according to a spokesperson.
The rate hikes ultimately under challenge by the new complaint are separate from other possible rate increases for consumers. Atlantic City Electric, for example, has asked for Board of Public Utilities approval for an 8% hike in the distribution portion of residents’ bills to cover infrastructure improvements. A ruling on that request is expected in August.
PJM had other recent news. Manu Asthana, its president and chief executive officer, announced he is stepping down at the end of this year. New Jersey State Sen. John Burzichelli said in an April 15 statement: “The departure of PJM’s president is an opportunity for the organization that determines our utility rates to reform its practices to prevent the spikes in electric bills that have been imposed on New Jersey ratepayers.”
Contact the reporter, Vince Conti, at vconti@cmcherald.com.
