Governor wants feds to investigate higher electricity prices

The fight between New Jersey Democrats and the state’s electric grid operator escalated this week, with Gov. Phil Murphy asking federal officials to investigate whether the company is responsible for the “exorbitant” rate increases set to take effect in less than two months. 

In a Wednesday letter to the Federal Energy Regulatory Commission, Murphy asked officials to probe whether grid operator PJM Interconnection’s most recent electricity auction may have been “subject to market manipulation” that will result in ratepayers’ bills increasing by hundreds of dollars a year beginning June 1. 

“I believe that billions of dollars in excessive costs for consumers are the direct result of fundamental flaws in PJM’s capacity market and were foreseeable and preventable,” Murphy wrote. 

PJM operates the grid for New Jersey and 12 other states. The company held a rate-setting capacity auction last July — in New Jersey, utilities annually buy electricity supply through auctions — and the state Board of Public Utilities has blamed the auction as the “main driver of these increases.” The board announced in February it approved the new rates, resulting in increases of about 17% to 20%, depending on the service territory. 

Democrats are anxious over the skyrocketing costs, which will kick in days before voters cast their ballots in the June 10 primary, when all 80 Assembly seats and the governor’s race will be on the ballot. Lawmakers have introduced a seven-bill package they say is intended to lower costs for consumers, including bills that would set new processes to determine a utility company’s profit margins and end a surcharge tacked onto monthly bills. 

In a statement, PJM officials blamed the price hikes on “insufficient generation in-state” and denied any market manipulation in the auction. PJM echoed complaints of New Jersey Republicans who say Murphy’s focus on offshore wind projects has resulted in energy supply issues.

“Consumers are now paying the price for this failure,” said Jeff Shields, PJM spokesman. 

During a Federal Energy Regulatory Commission meeting Thursday, commission chairman Mark Christie praised PJM and said politicians have been too critical of PJM. The company is “actually deserving of praise,” Christie said.

“I think is in many ways misplaced and lot of it is because of state policies that have sort of come to a head just recently. So I just want to say that with regard to defending PJM and defending their staff who work very hard, and work in good faith, by the way,” Christie said. “I never doubted PJM’s good faith.”

Another commissioner, Willie Phillips, said that those comments were “spot on and very well said.”

Christie said during a press conference that while he hadn’t seen Murphy’s recent letter, he’s seen his complaints, adding “a lot of these problems are some 20 years in the making, and I think a lot of it is just the very construct of a mandatory capacity market.” 

State Sen. Tony Bucco (R-Morris) has argued that the state’s energy policies under Murphy have led to supply-demand imbalances, and this, rather than market manipulation or anything PJM did, caused electricity prices to soar.

“You can’t increase demand to the point where the state can’t meet it, and they don’t have the supply to meet it. When you do that, it’s purely economics,” Bucco told the New Jersey Monitor. “Prices go up, and now our residents are going to be faced with that.