Lawmakers Grill BPU and PJM as Capacity Auction Spike Threatens New Jersey Bills

Chairmen of a joint Senate select committee and the Assembly Telecommunications and Utilities Committee convened a March 28 hearing to probe a sharp jump in wholesale power costs after PJM's most recent capacity auction and to press the New Jersey Board of Public Utilities and PJM for immediate relief and structural fixes.

Christine Gould Sidovi, president of the New Jersey Board of Public Utilities (BPU), told legislators that the February basic generation service auction and underlying PJM market rules were major drivers of a projected roughly 17% to 20% increase in the state's generation charges. "PJM's rules were the driving factor behind these increases," she told the committee, adding that FERC-directed changes and BPU interventions are expected to have a price-suppression impact (BPU estimated a potential $800 million reduction from recent PJM rule changes), but that prices remain elevated.

Sidovi outlined several near-term measures the BPU is pursuing: re-issuing a residential energy-assistance payment similar to the $175 credit issued previously to low- and moderate-income households; proposing expansion of the Universal Service Fund (USF) and enrollment targets for utilities to boost sign-ups; and using Clean Energy Fund and Solar Alternative Compliance Payment revenues to support bill credits. She also described grid modernization and interconnection-rule changes intended to shorten delays that keep solar and storage projects from connecting.

PJM's senior vice president for governmental member services, Asim Haq, told the committee the underlying problem is a rapid uptick in demand. "Demand is increasing due primarily to the proliferation of data centers, but also due to electrification and manufacturing," Haq said, and confirmed PJM's queue contains very large volumes of proposed projects. He said PJM has advanced roughly 50 gigawatts through recent queue reforms and opened a "reliability resource" lane that drew 94 applications totaling about 27 gigawatts. He urged multistate steps to "gate" large load commitments (for example, requiring deposits or contracts) so forecasts match likely real buildouts.

Lawmakers repeatedly pressed both agencies over the capacity auction outcome and whether bids reflected "real" future load. Senator Smith and others asked whether PJM had verified large corporate data-center commitments; Haq said PJM relies on distribution utilities and transmission owners for firming load forecasts but agreed better gating rules and state-level requirements would improve forecast accuracy.

Rate counsel and academic witnesses framed the policy choices. Brian Lipman, director of New Jersey's Division of Rate Counsel, emphasized affordability for vulnerable households and cited the independent market monitor's analysis that market design and market-power issues contributed materially to the auction result. "Market design and market power issues resulted in actual capacity market payments that were approximately twice as high as needed," Lipman summarized from the monitor's report, urging the legislature to pursue transmission-review authority, tighter oversight of supplemental transmission projects, and reconsideration of accelerated utility-recovery mechanisms.

Abe Silverman, a Johns Hopkins research scholar and former BPU official, recommended faster near-term deployment of shovel-ready storage and other projects that have cleared interconnection, shorter permitting timelines, and clearer multistate coordination on data-center siting and load validation. He also noted that effective-load-carrying-capability (ELCC) values lower the credited capacity for intermittent technologies, so an all-renewables swap is not a 1-for-1 replacement for thermal plants.

What lawmakers pushed for

- Short-term relief: Several legislators urged immediate, direct relief to consumers (repeat of a $175 targeted credit, quicker USF changes and improved enrollment efforts). BPU said a new USF year begins in October and stakeholder meetings on proposed USF changes were scheduled.

- Faster supply: Multiple members asked what the state could do to accelerate interconnection and construction. Officials pointed to storage and solar projects already through the interconnection queue as the fastest near-term resources (storage projects can be built in under two years in many cases), plus transmission upgrades and targeted reliability uprates.

- Accountability and oversight: Rate Counsel and some legislators urged greater transparency and more active oversight of supplemental transmission projects (projects utilities propose and build without regional competition), and asked the legislature to consider requiring utilities to join regional transmission organizations or to give BPU greater review authority.

What the witnesses said they could and could not do

- BPU said it can press FERC and PJM on market rules, proposal details and interconnection reform, and it can propose affordability tools such as USF changes and bill credits. Sidovi said the BPU has limited authority over generation supply charges, which are mostly set through PJM markets and rates beyond distribution-regulatory jurisdiction.

- PJM said it is subject to FERC and cannot unilaterally change some market constructs. PJM described recent filings to alter the reference resource and market rules ahead of the next auctions and emphasized it is working on queue reforms and a reliability-resource initiative to get high-value capacity into the market more quickly.

What comes next

Committee chairs said they will follow up with additional hearings that include utilities and will coordinate with federal representatives to press for greater auction and market transparency at FERC and PJM. Witnesses signaled willingness to return with more detailed data: BPU to provide USF balances and program details; PJM to provide queue and accreditation tables; and both to work with the legislature on options for gating large new loads.

Why it matters

Lawmakers and consumer advocates warned that without actions to smooth the upcoming July auction and speed credible new capacity, many households could see higher bills this summer and beyond. Rate counsel and others emphasized that protecting affordability will require a mix of near-term relief for vulnerable households and medium-term policy changes to accelerate reliable supply and curb the parts of market design that can amplify price spikes.

Ending note

The hearing produced no formal votes or motions. It clarified the core disputes: whether auction prices primarily reflected genuine supply-and-demand signals or were amplified by market-design flaws and speculative/unfirmed load forecasts; and whether state and federal regulators acted quickly enough. The committee said it would reconvene and press both PJM and BPU for specific, traceable follow-ups and data.