Power companies warn lawmakers about their plans to tackle rising bills

Yahoo

25-04-2025

Electric bills are set to spike starting in June, leading Democratic lawmakers to introduce bills they say are aimed at cutting costs for ratepayers. (Getty Images)
Leaders from New Jersey's four regulated utilities told a joint legislative panel Friday that the state could take greater steps to build power generation capacity and cautioned against some cost-saving proposals lawmakers have floated as ratepayers prepare for a double-digit utility bill hike this June.
Representatives of PSE&G, Jersey Central Power and Light, Rockland Electric Company, and Atlantic City Electric expressed willingness to play a role in electricity generation and billing changes that could spread high bills across multiple billing cycles. But they warned that lawmakers' proposals to lower utility profitability or break with the state's grid operator could do more harm than good.
'We recognize that this unfortunate increase will be delivered to our customers through bills with our name on it. This means whatever the facts are — and the facts are we are not responsible for this increase — we are involved. We recognize it and intend to be part of the solution,' said Richard Thigpen, senior vice president at PSE&G.
They warned against lowering utilities' return on equity — the rate negotiated with state regulators at which they are allowed to profit on their investments — saying it could limit investor interest in New Jersey's electric providers and imperil utilities' ability to upgrade infrastructure in the long run.
In New Jersey, return on equity rates typically hover around 9.6% — for every dollar they invest, they receive $1.096 back from ratepayers — and can be supplemented by incentives at the federal level that lawmakers are considering blocking.
'Investors — if they're not seeing the return that they're looking for as part of that investment in us, they may choose to go elsewhere and invest their money elsewhere,' said Phil Vavala, region president for Atlantic City Electric. 'That then could create the detrimental effect that ultimately would lead to investor disinterest that ultimately would then affect our ability to invest in the system.'
Joining a new grid operator would be no guarantee that ratepayers would get lower costs, they also warned.
'I think I would have a concern unless I was 100% sure that it would benefit the customers,' Alex Stern, an official with Exelon, the parent company of Atlantic City Electric. 'I don't know how it gets done in a way that doesn't make it worse for the customer financially.'
New Jersey's status as a net importer of energy and the continued loss of in-state net power generation as existing plants go offline pose significant hurdles to a break with New Jersey's grid operator.
Democratic legislators have increasingly sought to blame PJM Interconnection, the grid operator for New Jersey, 12 other states, and Washington D.C., for the spike in electricity costs, which is expected to add roughly $25 to a typical customer's monthly electricity bill beginning on June 1. Gov. Phil Murphy last week asked federal regulators to investigate whether there had been any 'market manipulation' that led to the price spike.
Sen. Bob Smith (D-Middlesex) renewed attacks against the interconnector Friday, charging without evidence that its voting members had colluded to push up energy capacity prices at a PJM-run capacity auction in July.
'I'd really like to know who sent the memo around, 'Let's everybody bid 10 times higher than last year.' If that doesn't smell like collusion, I don't know what does,' he said.
Republican lawmakers have pointed to Murphy's ambitious renewable energy goals as a cause of rising prices. That plan has focused chiefly on offshore wind farms, but each of those projects has been abandoned by developers or frozen by executive orders and other regulatory actions by the Trump administration.
Industry officials have said lower energy supply coupled with harsher weather and a steep spike in demand driven by artificial intelligence data centers after years of relatively stable electricity needs have driven bills and prices upward.
Utility officials said New Jersey could seek more in-state generation through legislative action or a bid process like the one used for the stalled wind projects.
Thigpen said the PSE&G had 'almost zero confidence' that higher electricity prices alone would incent the development of more in-state generation.
New Jersey in 1999 deregulated energy generation in hopes that competition would bring down prices in what, before then, was a monopolized market. Since then, the regulated utilities — called electric distribution companies — have increasingly withdrawn from generation, preferring to transmit power generated by others across the infrastructure they own.
At present, only PSE&G, which operates nuclear plants in Salem County that account for roughly 40% of New Jersey's in-state generation, creates any electricity in New Jersey, though representatives from all four regulated utilities expressed willingness to play a bigger role in generation Friday.
The timelines, costs, and political uncertainties associated with new generation make nuclear an unattractive power source to provide relief in the short term, Thigpen said.
Such projects take about a decade and billions of dollars to stand up, he said, and could lay at the whims of a future administration or Legislature. If a nuclear project approved under one administration was blocked by a subsequent one, the utility's investment would be in a precarious position, he noted.
'Now, we've spent several billion dollars, and the state is no longer behind it,' Thigpen said, speaking hypothetically. 'That is what I would call political risk.'
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