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EDCs ask BPU to approve two‑auction BGS procurement, seek pre‑approved rate design and contingency cost recovery
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Summary
EDCs and consultant NERA told the Board of Public Utilities the 2026 proposal keeps a two‑auction structure and a full‑requirements product, asks for pre‑approved rate design and contingency cost recovery, and would use capacity proxy prices for energy years 2028–29 if PJM BRA results are not available in time.
President Christine Golos Adobe convened the hearing of the New Jersey Board of Public Utilities to receive public comments on the electric distribution companies’ (EDCs’) 2026 basic generation service (BGS) procurement proposal (Docket ER25040190). Rachel Northcutt of NERA, which the presenters said has managed New Jersey BGS auctions for more than 20 years, outlined the EDCs’ recommendation to continue auction‑based procurement.
Northcutt said the EDCs propose two separate auctions: a BGS CIEP auction for larger commercial and industrial customers and a BGS RSCP auction to procure residential and small commercial supply on a three‑year rolling basis meant to smooth price volatility for smaller customers. "The rolling procurement structure for smaller commercial and residential customers . . . provides a proper balance between reflecting current market prices and protecting those customers from market volatility," Northcutt said.
The proposal calls for a full‑requirements product in both auctions. Northcutt said suppliers would remain physically and financially responsible for hour‑by‑hour service and would be required to satisfy capacity, energy, ancillary services and New Jersey renewable portfolio standard obligations. "BGS suppliers will continue to have load serving responsibility for BGS load," she said.
Paul Cardona of NERA described the standard contract that would apply across the EDCs, including uniform creditworthiness requirements and financial guarantees that enable a price‑only identification of winning bidders. Cardona also explained the EDCs’ plan to use capacity proxy prices for energy years 2028 and 2029 if PJM Base Residual Auction (BRA) results are not known at least five business days before the RSCP auction, to avoid bidders adding excessive risk premiums. He said the BRA results for the 2028 energy year are expected in December 2025.
Cardona described the auction as a descending‑clock, multi‑product, multi‑round online auction conducted with a web‑based interface and supported by an auction manager that maintains an auction website, runs webcasts and publishes bidder Q&As. He listed competitive safeguards including volume adjustments, bidder caps to limit the amount any single bidder may win, and association rules to guard against collusion.
To conclude, the EDCs asked the board to approve the auction process as filed, to establish the rate design prior to the auction, to permit the board to render decisions on auction results within two business days of auction close, and to approve contingency plan cost recovery and accounting set out in company addenda.
Next steps: the board will accept final written comments on the BGS procurement proceeding until the close of business on Oct. 10, 2025; presenters noted no formal vote was taken at the hearing.
