N.J. Dem senators call for probe of grid operator as electric prices surge

Yahoo

2 days ago

Democratic senators want grid operator PJM investigated. Republicans say the Murphy administration is to blame for high electric prices. (Dana DiFilippo | New Jersey Monitor)
State senators sparred on the chamber's floor Monday over a resolution directing New Jersey energy regulators to launch an investigation of the state's grid operator, one day after steep electricity price hikes took effect.
The resolution, which passed in a 25-12 vote along party lines and must still be approved by the Assembly, calls on the Board of Public Utilities to investigate PJM Interconnection's capacity market auction, a price-setting auction that saw a nearly tenfold increase over the previous sale last July.
Democrats have sought to pin the blame on the rise in electricity bills on PJM, arguing it was too slow to connect renewable projects to its grid, thereby depressing supply and pushing prices upward. In some cases, they've outright claimed PJM's process was corrupt.
'The problem begins and ends with a grid that doesn't work. We are not investing enough money in this grid. The grid is held together by chewing gum, toothpicks, and bobby pins,' said Sen. Bob Smith (D-Middlesex), who chairs the chamber's energy panel. 'So now anyone who wants to enter the grid has to get an approval for a connection, and in the case of New Jersey, for the last two-and-a-half years, we've had 79 projects in the queue that PJM would not approve.'
Industry officials and experts have said electricity prices are rising because of an imbalance between supply and demand.
Demand, which had been roughly stable for decades, is surging amid growing electrification and the rise of power-hungry artificial intelligence data centers.
Meanwhile, New Jersey's own supply of electricity has fallen as the state shuttered fossil plants and renewable projects — chiefly offshore wind — struggled to get off the ground, leaving it more reliant on power imported through PJM's grid.
Republican members have charged Gov. Phil Murphy's renewable-heavy energy agenda and reliance on offshore wind projects are responsible for the price surge. The offshore wind projects have stalled because of rising costs and opposition by the Trump administration.
'Experts pointed to a whole host of sources and culprits that have brought us here today, a place that was foreseeable and predictable. And now we want to limit the investigation to PJM?' said Sen. Tony Bucco (R-Morris), the chamber's minority leader.
Some GOP members argued the Board of Public Utilities, which they charge is partly to blame for rising energy prices, was an inappropriate pick to conduct the probe. Sen. Bob Singer (R-Ocean) said there is some support for sunsetting the board.
'You've got to put the problem at the foot of those who created it. You've got to investigate those who created it, and you have to replace them if necessary,' Singer said.
The Board of Public Utilities is the regulatory body charged with approving utilities' requests for rate increases. New Jersey's regulated utilities do not profit from the sale of electricity itself, but they are permitted to recoup the costs of their investments and some other costs at a markup, typically around 9.6%.
PJM itself declined to comment on the resolution but said the current price spike was driven by a divergence between supply and demand.
'These higher prices are the result of a loss in electricity supply caused primarily by decarbonization policies that have led to an uptick in generator retirements, coupled with an unprecedented spike in electricity demand due largely to the advancement of data centers to power artificial intelligence, the electrification of vehicles and heating systems, and the onshoring of U.S. manufacturing,' said Dan Lockwood, a spokesperson for PJM.
The Republicans said a special committee that held hearings on rising energy prices earlier in the spring should conduct the investigation, which they said should include a probe of the Board of Public Utilities.
Democratic members argued the board has institutional and subject matter knowledge that would lend expertise to an investigation that might be absent under the special committee, though some said the panel should continue to play a role.
Still, Sen. Paul Sarlo (D-Bergen), the chamber's budget chairman, questioned the regulatory agency's future.
'We ultimately should be part of the long-term solution, and I'm not sure if BPU should be part of the long-term solution under the next governor,' Sarlo said.
Murphy leaves office in January.
The Senate approved separate legislation Monday that would require the Board of Public Utilities to study data centers' impact on electricity prices after tabling a Republican attempt to amend it. That bill, which passed the Senate unanimously, now goes to Murphy's desk.