The New Jersey Board of Public Utilities (NJBPU) recently released an in-depth study that has found that the capacity market run by PJM Interconnection (PJM), the regional grid operator, is no longer capable of delivering reliable power at the lowest possible cost. NJBPU is calling for reforms to seek improvements to the issue, looking to find a solution for New Jersey residents.
“New Jersey ratepayers deserve a clear explanation of why their bills are rising and what can be done about it,” said NJBPU President Ben Hertz-Shargel. “The fastest way to lower bills is getting new power generation built. That requires replacing PJM’s unpredictable price spikes with modern rules that attract long-term investment while protecting customers. States must be allowed an active role in PJM governance to ensure wholesale market structures serve the public interest.”
The report has come as a result of electricity bills in the Garden State increasing by roughly 20 percent in the past year, largely contributed by rising costs in JPM’s capacity market. New Jersey’s electric bill costs are roughly 25% higher than the national average, leaving many wondering what can be done to resolve this issue.
PJM Interconnection is responsible for coordinating the movement of wholesale electricity and managing grid reliability throughout 13 different states, including New Jersey. Capacity charges currently make up roughly 15-20% of a customer’s electric bill, though it is the largest cost component that the NJBPU cannot directly set, regulate or change.
In August 2025, the Legislature passed legislation that instructed NJBPU employees to look into whether PJM’s capacity market is still doing its job and report their findings within a year. The staff examined how the market is structured, how it has performed over time and what has been causing sudden price fluctuations. PJM’s auction data was reviewed and the staff also tracked the region’s growing demand forecasts.
Several recommendations for reform have been given as possible solutions to solving this issue. The first recommendation is to make large, new users pay their share. The second is modernizing PJM’s market design to reflect current-day conditions. The third recommendation looks at expanding longer term contracting options to offer long-term financial guarantees. The fourth and final recommendation is to update PJM’s governance rules to weigh in on decisions that could have implications on reliability and affordability.
Moving forward, the NJBPU will be using these ideas to advance reforms within PJM’s stakeholder process at the Federal Energy Regulatory Commission (FERC). The NJBPU will continue to work on reforms focused on how businesses and utilities interact with one another.