Two virtual public hearings on Atlantic City Electric’s proposed 8.1% increase in its distribution rates, along with a $1.55 monthly hike in the utility’s base customer charge, drew few attendees and comments.
ACE’s proposed increase in its distribution rates would be in addition to the new electricity supply rates set to take effect June 1; that expected 17% to 20% increase is not set by the utility but rather is a pass-through of charges already approved by the state Board of Public Utilities.
ACE has no control over the supply rate increase coming on June 1. It does charge ratepayers for distribution of electricity to homes and maintenance and upgrading of the delivery infrastructure, the local grid. It is reimbursed by ratepayers for its investments.
In November 2024, ACE asked for the 8.1% rate hike. The company says it seeks to recover $109 million invested in its smart network and in a series of infrastructure projects on the local electricity grid.
Utility spokesperson Brian Ahrens said the investments are for grid modernization projects and “efforts to improve resiliency against storms to further improve reliability for our customers.” Ahrens added that grid improvements have led to a “41 percent overall decrease in outages over the past 10 years.”
ACE’s base customer charge would go from $6.75 to $8.30 if the utility’s rate request is approved.
The utility’s two proposed increases have not yet come before the BPU for a vote; the agency has twice postponed consideration of the request and is now scheduled to take it up in August. The May 27 hearings were to supply public input to that August consideration by the board.
The utility’s request for the distribution rate hike comes at a particularly sensitive time, as the separate supply rate increase kicks into effect June 1.
The issue has become a central one in the 2025 Assembly elections. Energy pricing, and the state’s overall energy plan, is also a key issue in the race to replace Gov. Phil Murphy, who is barred from reelection by term limits.
At the first hearing on May 27 on ACE’s requested 8.1% increase only one person spoke. Matthew von der Hayden, administrator for Stafford Township in Ocean County, said many residents of his township and nearby municipalities “had a hard time” dealing with the rising electricity bills last summer. His message to the BPU was that it is “too soon” to seek another rate increase.
Both hearings were sparsely attended, and the second hearing, which followed a little later in the day, likewise drew little comment, a BPU official said. Public notice of the hearings was not widely distributed.
In a May 7 report to the PBU on possible ways to mitigate the impact of the rate hikes, ACE said it was important to understand how the state came to the present moment.
The report noted that the state deregulated the electricity generation market in 1999. This subjected the supply price to market forces that state officials hoped would drive down prices. As the report put it, “Electric generation became a competitive service.”
Recent testimony by electricity utility officials before the Legislature added a supply and demand equation to that competitive marketplace. The officials painted the following picture for the lawmakers.
Market forces are driving prices up at rapid rates because of a supply imbalance caused in part by the attempt to transition the state’s energy profile away from fossil fuels. With demand rising due to the state’s policies of electrification in the transportation sector and in residential home heating, and with the unexpected rise in demand from the introduction of artificial intelligence capabilities into the state’s more than 70 data centers, market pressures are resulting in higher capacity pricing in auctions.
Along with this rise in demand, the state is experiencing a lag in the generation of electricity. Fossil fuel generating capacity has been allowed to decline faster than renewable and other green energy sources of supply have developed. As the supply imbalance grows, prices rise.
The rapid increases were reflected in the July 2024 results of the PJM Interconnection auction. PJM operates the electricity grid for New Jersey and all or parts of 12 other states, and the 2024 auction gave a full year’s notice that rates were about to soar.
The state is also a net importer of electrical energy, with in-state generation accounting for only about 75% of what is consumed. This puts New Jersey even more at the mercy of external forces on its supply.
In February the BPU approved the July 2024 auction results, meaning significant rate increases for state ratepayers. In April, as the issue of energy prices became more central to political campaigns, the agency ordered the state’s utilities to present plans for potentially deferring the rate increases until after the heavy usage that characterizes the summer months.
ACE’s response was the May 7 report. The report makes clear that any deferral of charges would be just that, a deferral subject to later collection. The conclusion in the report states bluntly that ACE “urges the board to take other affordability measures and potential negative impacts into consideration as it assesses the bill impact mitigation options before it.”
The results of the two lightly attended public comment hearings will be sent to the BPU for consideration in its final decision on the ACE distribution rate increase request. The utility says in its May 7 report that “it is a matter of well-settled law that the costs to provide [service] must be recovered on a full and timely basis.” The report goes on to defend the upcoming supply price increases as “consistent with market conditions.”
Contact the reporter, Vince Conti, at vconti@cmcherald.com.
