New Jersey BPU calls for PJM capacity market reforms

The New Jersey Board of Public Utilities (BPU) has released a study calling for significant reforms to the PJM Interconnection capacity market. The report suggests the current Reliability Pricing Model can no longer reliably deliver electricity at the lowest possible cost, following a roughly 20 percent increase in New Jersey electricity bills last year.

Capacity charges, which represent 15 to 20 percent of a typical electric bill, are identified as a major cost component that state regulators cannot directly control. To mitigate rising costs, the BPU recommends that large new electricity users, such as data centers, be required to provide new generation resources to support their own demand. The agency also proposes replacing the single annual capacity auction with a seasonal structure to better reflect supply and demand conditions.

Additional recommendations include expanding long-term contracting options to reduce price volatility and increasing state influence over PJM governance to ensure wholesale market structures serve the public interest. The study was submitted to Governor Mikie Sherrill and state lawmakers as part of a legislative requirement.