Last week the electric rate hike for June 1, 2026 was announced. The good news is that it won’t be nearly as high as the June 1, 2025 rate hike. The bad news is that the June 1, 2025 rate hike was really high. Why?
Some blame PJM, others the Governor. How about both?
In January 2008 oil was $95/barrel, $145/barrel in July 2008, and closed the year at $45/barrel. The supply/demand of the commodity itself was not the reason for the dramatic swings in the course of a year. Rather it was financial interests taking advantage of an opaque market which impacted the real world prices we paid for oil. Unlike oil in 2008, the real world demand for electricity is increasing at a dramatic rate, driven in real time by data centers and artificial intelligence. And this has happened against the backdrop of the loss of in-state electric generating capacity. While the closing of Oyster Creek electric generating facility happened in 2018 on Governor Murphy’s watch, it was not as a result of his policies. The “all eggs in one basket I dropped” policy of new electric generation being off-shore wind and nothing to show for it, is his policy.
Critics of PJM cite the number of renewable electric generation projects in the queue which have not been brought on-line as the answer to our dilemma. Incorrect. The grid doesn’t care how much electricity any source can generate. The grid cares about how much electricity any source can reliably supply. Why?
The electric grid must continuously operate within very specific electrical tolerances – equilibrium – or it will crash. The lack of reliable electric supply due to the intermittence of the wind-blowing and sun-shining is the issue. This was amplified by a US Department of Energy’s report released earlier this month regarding electric grid reliability:
- Retirements plus load growth increase risk of power outages 100 times in 2030. Allowing 104 GW of firm generation to retire by 2030—without timely replacement—could lead to significant outages when weather conditions do not accommodate wind and solar generation. Modeling shows annual outage hours could increase from single digits today to more than 800 hours per year. Such a surge would leave millions of households and businesses vulnerable. We must renew a focus on firm generation and continue to reverse radical green ideology in order to address this risk.
- Planned supply falls short, reliability at risk. The 104 GW of plant retirements are replaced by 209 GW of new generation by 2030; however, only 22 GW comes from firm baseload generation sources. Even assuming no retirements, the model found outage risk in several regions rises more than 30-fold, proving the queue alone cannot close the dependable-capacity deficit.
And…
If you think it’s expensive staying cool with electricity, try staying warm with it. More on that soon regarding S249/A4844 “The Electric Heat Pump Mandate & Rent Increase Act of 2025”
Eric DeGesero is executive vice president of the Fuel Merchants Association of New Jersey.
