Madison council hears warning on rising electric costs tied to PJM capacity rules

Brian Vida, executive director of the Public Power Association of New Jersey, told the Madison Borough Council that municipal electric utilities across the Mid-Atlantic face sharply higher capacity costs driven by changes in the regional grid operator’s rules and a backlog of generation projects.

Vida said Madison’s wholesale capacity charge is rising roughly 250% this year, from about $800,000 to $2,750,000, and he warned those costs are not unique to Madison. “Madison’s capacity costs are actually rising 250% this year. They’re going from 800,000 to about $2,750,000,” Vida said.

The increase matters because capacity — the portion of electric bills that pays for reserve generation and reliability — now makes up a larger share of municipal wholesale costs. Vida told the council the upward pressure comes from four broad factors: increased demand (notably large data centers), decreased supply (older plants retiring and slow replacement), rule changes at PJM that reduced accreditation for many types of generation, and inflationary pressures on construction and fuel.

Vida said PJM’s interconnection process — the multi-stage review that lets new power plants and renewable projects connect to the grid — has become a multi-year bottleneck. “In the past it took about two years for PJM to complete its study process. Today, these projects are waiting five years or longer,” he said, adding that most of the projects in the queue are renewables.

He also contrasted the municipal utility position with investor-owned utilities, which have announced rate increases for customers beginning in June 2025: PSE&G about 17%, JCP&L about 20%, Atlantic City Electric about 17%, and Rockland about 18%. Vida noted Madison has not raised retail rates since 2010 and the council had chosen not to raise rates this year despite the higher wholesale costs.

Council members and members of the public asked questions about causes and solutions. Council President Rachel Ehrlich thanked Vida for the clear explanation: “This was really helpful,” she said, and noted the presentation reinforced public discussion about the causes of anticipated summer rate increases elsewhere in the state.

Residents in the public comment period stressed the interconnection backlog and state regulatory responses. Ken Dalski of Empower New Jersey told the council he sees a persistent backlog and urged faster action: “PJM’s enormous backlog of mainly renewable energy sources is a long story,” he said.

Vida described potential mitigations being pursued at regional and federal levels, including additional transmission investments, an emergency interconnection queue bypass ordered by the Federal Energy Regulatory Commission, and a short-term reliability initiative to move shovel-ready projects forward. He also said local self-generation and battery storage can reduce a municipality’s contribution to regional peak demand and therefore lower capacity charges; he pointed to a 15 MW battery project in South River as an example.

The council’s consent agenda later included a resolution calling for reforms to the PJM interconnection process; that resolution was placed on the consent agenda and adopted as part of the evening’s votes.

Madison officials did not announce any immediate rate changes at the meeting. The presentation and the council discussion make clear the borough is watching wholesale market developments closely as municipal utilities and neighboring investor-owned utilities prepare for higher bills this year.