Residential Electricity Prices Inch Up Due to Reliability Investments

One exception to higher prices is JCP&L, whose customers will see a slight drop in their electric bills

Credit: Governor's Office/Tim Larsen
Richard Mroz, president of the state's Board of Public Utilities
Even with low natural-gas prices driving down the price of generating electricity, most residents will pay a tad more on their monthly bills this summer due to higher expenses associated with providing reliable service.

All but one of New Jersey’s electric utilities will boost bills following an annual state-run auction that helps determine how much consumers are charged for electricity. Jersey Central Power & Light’s more than 1 million customers will see a slight drop in monthly bills of $1.12, or 1.2 percent.

The results underscore how a growing portion of the customer’s bill is driven by factors outside the control of state regulators, primarily the need to upgrade or build new transmission lines and ensurr there is enough capacity to keep the lights on, including during extreme weather.

Without those dynamics, ratepayers would have seen modest decreases in their bills when the new rates take effect in June for the next 12 months. The increased costs, imposed by actions taken by PJM, the operator of the regional power grid and approved by a federal agency, also are not likely to disappear anytime soon, state officials said.

“Unfortunately, not. That’s why we are continuing to challenge those costs,’’ said New Jersey Board of Public Utilities President Richard Mroz, referring to challenges the agency has filed with the Federal Energy Regulatory Commission. The BPU oversaw the auction, the 15th year it has done so since the state deregulated the energy industry.

“There’s a large portion of the cost which the board does not have any control over anymore,’’ noted Division of Rate Counsel Stefanie Brand, who represents the interests of ratepayers in matters affecting their bills. The board does establish rates governing how much utilities can charge customers for delivering electricity to a home or business, but that is much less than the approximately 66 percent or more of the cost of generating the power.

The rapid drop in natural-gas prices generally has been a boon to electric customers, especially in a state that consistently ranks among the top 10 in energy costs. Mroz said this year’s auction is the eighth in a row in which residents and small to medium-sized businesses have seen relatively stabilized prices.

Last year, customers of three utilities, the exception being Public Service Electric & Gas, had very modest dips in their bills of up to 3.2 percent. Bills from PSE&G, the state’s largest utility with more than 2 million customers, increased by 2 percent.

PSE&G, once again had the largest increase following this year’s auction, with a 3.5 percent increase or $3.95 per month, a bigger boost than others. Company officials attributed this to its significant investment in transmission — the high-voltage lines used to transport power over long distances.

The Newark company, however, said in a statement that even with the rate increase, its customers will be paying 6 percent less than last year, primarily because of the expiration of other longstanding charges related to the restructuring of the power sector.

With the lower auction prices and higher capacity costs factored in, the half-million customers of Atlantic City Electric will see monthly bills rise by $1.29, or 1.1 percent. Bills for the 66,000 customers of Rockland Electric will increase by 87 cents a month or 0.7 percent.

The new prices affect only those customers who have not switched from their incumbent utility to an alternative supplier in the hopes of securing a better deal. Most residential customers, however, have not bothered to switch.

There was a second auction in the past week conducted for larger commercial and industrial customers. Prices remained essentially stable, with the exception of PSE&G, which saw higher costs. The utilities do not make a profit on the electricity secured during the auction; they simply pass on the cost to the customer.