Atlantic City Electric customers have received or are receiving their first monthly bills with the new supply rates that everyone has been talking about since grid operator PJM Interconnection held its capacity auction in July 2024.
We were told that the average ACE customer would see supply rates jump 17.23% because of higher electricity wholesale costs, which in turn are due to a supply/demand imbalance that everyone is blaming everyone else for.
While the bills hitting ratepayer mailboxes now reflect new rates, anyone who expected to be the mythical average customer who would see an increase of 17%, or roughly $25, is likely to be very disappointed.
This reporter’s June bill was up 70% over May with a much smaller increase in usage. The analysis of the monthly utility bill comparing month to month is best left to those with an MBA from Wharton. Nothing in the billing process is intended to make the details intelligible to the average ratepayer.
Yes, usage plays its role, but not in a way that is easy to discern. Why, for example, did the Conservation Investment Program fee rise almost 200% from May to June? Why did the Regional Greenhouse Gas Initiative fee rise by 80% from May to June? No one seems to explain these increases when they discuss the 17% supply increase.
A look at the basics of the bill does not make things much clearer. There are three basic charges: supply, transmission and distribution. We knew the supply rate was going up. But again, making sense of it is almost impossible.
Simple math is not going to yield the most accurate answer given the complexities that have been built into the electricity rate structure. Yet it should yield something that is in the same general neighborhood as what we have been told to expect. Try it, and confusion mounts.
Taking just the kilowatt-hours of supply on this reporter’s May bill, leaving off fees, distribution and even transmission expenses, and dividing that number of kilowatt-hours by the supply costs on the bill yield a very rough per-kilowatt-hour number.
Doing the same for the June bill yields a new number that is now 43% higher than May’s. It is likely that the explanation you would be given by the utility has to do with tiered rates based on usage, but still you wonder how the simple math described above can be so far from the 17% average increase we were told we were getting.
Check the BPU website for some common-sense explanation of how this new rate is calculated and applied and you will check in vain. Check the ACE website section entitled “Understanding My Bill” and you will be no closer to understanding the actual interaction of rates and usage. Hint – it is not a simple multiplication.
There is nothing in the bill that this reporter is looking at that can be explained as a 17% average increase in the supply rate based on last year’s auction. The bill is a mystery except for the amount owed.
As ratepayers scratch their heads and worry about paying the bill, the major players continue to blame each other.
For the state’s Republicans, the fault lies mainly with Gov. Phil Murphy and the Democratic-controlled Legislature. The state’s energy plan, they argue, allowed the premature retirement of five in-state coal-fired power generation plants and one nuclear plant before other sources of power generation were ready to pick up for the lost energy output. Murphy’s use of executive orders to push for offshore wind farms that were strongly opposed by residents in the coastal zone also comes in for criticism.
For the Democrats, the problem is squarely due to the inefficiency and possibly even manipulation of the supply market by PJM, the grid operator and wholesale energy manager. PJM, Murphy says, has blocked a large number of potential power supply sources from supplying energy to the grid. Republicans come in for blame as well because they worked to sabotage Murphy’s efforts to build a series of offshore wind farms that would have supplied the needed power lost from the coal plants.
For PJM, state and federal policies played a role in the delay of bringing generation sources onto the electric grid. Regulations and local opposition to siting renewable generation technologies like large solar farms or even onshore wind farms are causing problems for generators who have already received permission from PJM. The grid operator argues that its reforms of the cumbersome process that leads to grid connections are working and the backlog is shrinking.
Meanwhile, the governor has promised $430 million in redirected state funds to provide financial relief to ratepayers. The state’s four distribution utilities, of which ACE is one, have also promised repayable rate credits in July and August. ACE’s parent company, Exelon, has also promised relief for qualified ratepayers. None of those relief packages is yet tangible in the billing process.
Lest we all forget, just off-stage is a requested rate hike from Atlantic City Electric, an 8% increase in the distribution rate. The BPU pushed off a decision in February, again in April, and now says it will consider the request in August.
By the fall the state relief dollars likely will be history, as temporary a “fix” as Murphy said they were when he announced them. The credits from ACE will be in repayment, adding a new element to the bill for some period of months.
The new rates, possibly including the ACE 8% increase, will still be there, inflating the cost of electricity as state policy continues to push the electrification agenda for transportation and home heating. Adding to the mix will likely be the continued growth of data centers running artificial intelligence with its voracious appetite for both electricity and water.
The bills for it all will be no more transparent than they are now.
Contact the reporter, Vince Conti, at vconti@cmcherald.com.
