How has Sherrill managed skyrocketing energy costs and demand?

Governor Sherrill launched a major energy pivot focused on affordability, freezing rate hikes and passing three laws expected to save ratepayers over $1 billion annually.

The administration advanced an “all-of-the-above” strategy by bringing new solar online, embracing nuclear baseload expansion, and establishing safety standards for battery storage.

Despite these state reforms, regional PJM capacity deficits and surging power demand from data centers continue driving up wholesale electricity costs for residents.

When Governor Mikie Sherrill took office in January 2026, she inherited an energy landscape defined by rising electricity costs, stalled offshore‑wind development, aging natural‑gas infrastructure, and intensifying pressure from data‑center growth. In her first six months, Sherrill has moved to reshape New Jersey’s energy strategy around affordability, reliability, and a broad “all‑of‑the‑above” portfolio that includes nuclear, solar, storage, and modernized grid infrastructure. Her early actions represent one of the most aggressive energy pivots in recent New Jersey history.

A day‑one rate hike freeze

Sherrill’s first major energy action came within hours of taking office. Through Executive Orders 1 and 2, Sherrill froze pending electric rate increases and directed state agencies to accelerate new power generation. The freeze was framed as an emergency measure to protect households and small businesses from rising electricity costs driven by PJM capacity prices, natural‑gas volatility, and utility capital spending. The freeze set the tone for her administration: energy policy would be evaluated first through the lens of affordability. It also signaled a shift away from the Murphy administration’s offshore‑wind‑first strategy toward a more diversified approach.

Critics argue that the Day‑One rate freeze only locks in the cost of wholesale electricity, leaving delivery charges and long‑term system costs untouched, and that the freeze could delay essential grid‑modernization work by preventing utilities from recovering needed investment. And because it doesn’t address New Jersey’s underlying energy shortfall, the freeze risks masking deeper supply‑capacity problems rather than solving them.

Three major affordability laws

Within her first six months, Governor Sherrill signed three major energy affordability laws aimed at saving New Jersey ratepayers over $1 billion annually. The ROE adder repeal (S1673/A2757) removes utility bonus incentives, directing investment toward grid modernization rather than legacy infrastructure. Meanwhile, the Advanced Grid Technologies Act (S4411/A5188) tightens utility spending oversight and accelerates deployment of modern automation and monitoring tools essential for integrating solar, storage, and nuclear power. Lastly, the Data Center Fair Share Act (S731/A796) ensures surging data centers pay their true energy and infrastructure costs, preventing unfair cost shifts onto local households and small businesses.

While politically popular, some noted that this trio of bills would have the unintended consequences of slowing down investment in substations and critical grid infrastructure, delaying approval of grid modernization projects, and discouraging large-scale digital infrastructure investment.  

Direct bill credits for residents

Sherrill paired structural reforms with immediate relief. Her administration delivered:

• $25 Residential Universal Bill Credit (RUBC) for all 3.6 million ratepayers
• $150 REAP credit for low‑ and moderate‑income households

These credits were designed to offset winter and early‑spring energy costs while longer‑term reforms take effect.

Solar: The first new generation to come online

The only new generation that has officially come online during Sherrill’s first six months is solar. The Board of Public Utilities announced that 12 Murphy-era solar projects, a mix of community solar, commercial rooftop installations, and distributed solar arrays, were energized statewide. Together, they produce enough electricity to power approximately 45,000 homes.

Nuclear: A central pillar of reliability

One of the most notable shifts under Governor Mikie Sherrill is her explicit embrace of nuclear energy as a core component of New Jersey’s future energy mix. While Governor Phil Murphy focused on offshore wind, Sherrill has positioned nuclear as essential for reliability, affordability, and carbon-free baseload power.

Backed by landmark 2026 legislation – specifically S3870, which removed legacy CAFRA permitting roadblocks for nuclear sites, and A4881 / the Power NJ Act, which established an advanced nuclear procurement and Reliable Capacity Certificate framework – the Sherrill administration has:

• Directed the BPU to evaluate next-generation reactors and small modular reactors (SMRs)
• Reaffirmed support for the continued operation of Salem and Hope Creek
• Integrated nuclear into PJM reliability modeling discussions
• Established the regulatory and market pathways for future advanced nuclear procurement

While no new reactors have begun construction, the Sherrill administration and Legislature have formally dismantled New Jersey’s decades-long nuclear moratorium and established the statutory machinery for expansion.

Battery storage: Safety first, expansion later

Sherrill’s approach to battery energy storage systems (BESS) has been cautious but forward‑looking. With lithium‑ion fires drawing national attention, she launched New Jersey’s first statewide BESS safety and siting review. Her directives require:

• Thermal‑runaway prevention standards
• Emergency‑response coordination with local fire departments
• Environmental‑impact disclosures
• Mandatory incident reporting
• A full audit of existing and proposed BESS sites

Sherrill supports storage as essential for solar integration and peak‑shaving, but she has made clear that safety and transparency must come first. Her administration has also expressed interest in long‑duration storage technologies such as iron‑air and flow batteries.

Natural gas: No new expansion, but no rapid phase‑out

Sherrill’s stance on natural gas is pragmatic. She has not proposed bans or shutdowns. And while natural gas is currently responsible for nearly half of the state’s electricity generation, Sherrill has not committed to new gas pipelines or new gas‑fired power plants.

Her administration has:

• Ordered a review of the existing gas‑generation fleet
• Tightened oversight of methane‑leak detection and pipeline safety
• Increased environmental‑justice scrutiny of gas peaker plants
• Froze rate hikes tied partly to gas‑price volatility

Storm resiliency: A strong bulk grid, weak distribution links

During several severe winter and spring storms, New Jersey’s bulk power grid performed well. PJM reported no statewide reliability emergencies, and nuclear and natural‑gas plants maintained stable baseload output during periods of low solar generation. Outages that did occur were almost entirely distribution‑level—caused by downed wires, flooded substations, and damaged transformers. Sherrill’s grid‑modernization agenda, including advanced monitoring and automation, helped utilities isolate faults more quickly. The storms highlighted a key vulnerability: while the transmission system remains strong, aging distribution infrastructure continues to be the primary source of outages.

Public reaction: appreciation, confusion, and frustration

Public reaction to Sherrill’s energy agenda has been mixed. Many residents welcomed the rate freeze and bill credits, but frustration remains high because overall bills have not fallen. Most households do not distinguish between state‑controlled utility rates and federally regulated PJM wholesale costs, leading to confusion about why bills continue rising. Small businesses, facing steep capacity‑driven increases, have been especially vocal. Environmental groups are split—some praise her nuclear openness and grid modernization, while others argue she is too cautious on offshore wind and electrification. Ratepayer advocates generally support her affordability measures but emphasize that PJM’s market conditions remain the dominant driver of high bills.

Impact on New Jersey rates: High prices for years to come

The most recent PJM capacity auction, released in July 2026, underscored the challenges facing New Jersey and the broader region. The auction cleared at $325/MW‑day, the maximum allowed under PJM’s temporary price collar. It also failed to meet PJM’s reliability requirement, falling short by 6.8 GW—the second consecutive year PJM has missed its one‑in‑ten reliability standard. New generation remains insufficient, with only a few hundred megawatts of new capacity clearing despite rapidly rising load driven by data‑center growth. The results confirm that PJM is entering a multi‑year period of tight supply and elevated costs.

Even with Sherrill’s freeze on utility‑proposed rate increases, PJM‑driven wholesale costs will continue to push New Jersey electricity prices higher. Capacity charges alone are expected to add 2–4 cents per kWh to commercial bills and 1.5–5% to residential bills. For many businesses, total supply costs may rise 18–25%. These increases are structural, not temporary: until PJM brings significant new generation online or curbs explosive load growth, New Jersey ratepayers will face sustained upward pressure. Sherrill’s affordability laws soften the impact, but they cannot override wholesale market dynamics.

Household energy spending: among the highest in the country

New Jersey households spend more on energy than most of the country. The average household pays:

• $150–$175/month for electricity
• $900–$1,200/year for natural gas
• $2,000–$2,800/year for gasoline
• $1,800–$4,000/year for heating oil or propane (for the ~10% of households that use them)

Total annual energy spending typically ranges from $4,700–$6,100, and can exceed $8,000 for heating‑oil households. And while many households spend 6–8% of income on energy, the burden is higher for lower-income families. Households under $50,000 spend 10-15% of their income on energy. Households under $30,000 spend even more, 15-25% and 30% during winter cold snaps. High electricity rates, older housing stock, and limited access to efficiency upgrades amplify the burden.

A future of increased energy demand

New Jersey faces an unprecedented surge in electricity demand, primarily driven by explosive regional data-center growth. In key service territories like PSE&G, data-center power requirements are projected to jump from under 400 MW to over 3,000 MW. Compounding this pressure is the statewide shift toward electrification, as more residents adopt electric vehicles and transition to electric heating systems. Beyond technology hubs and residential trends, expanding commercial operations and overall economic expansion further strain the grid. This rapid load growth severely tightens regional supply margins, elevating wholesale energy costs across New Jersey. How Sherrill balances the

Continuing challenges

Sherrill’s greatest energy challenges lie at the intersection of surging electricity demand and regional supply deficits. Explosive data-center expansion is rapidly increasing grid loads just as legacy power plants retire, deepening regional capacity shortfalls and driving up ratepayer costs.

To ensure long-term grid stability and affordability, Sherrill must work to secure clean, reliable baseload generation. While solar rapid-deployment helps, New Jersey must expand nuclear capacity and battery storage to guarantee uninterrupted power when renewables dip. Concurrently, modernizing fragile local distribution networks remains critical to withstand severe weather.

Sources:

Energy CX Intelligence. (2026, July 21). PJM capacity auction results: What businesses should know. https://www.energycx.com/blog/what-businesses-should-know-about-the-recent-pjm-capacity-auction

Energy Changemakers. (2026, July 15). New Jersey data center law opens way for distributed energy. https://energychangemakers.com/new-jersey-data-center-law/

Jersey Vindicator. (2026, January 20). What Gov. Mikie Sherrill’s first executive order does to address soaring electric bills in New Jersey. https://jerseyvindicator.org/2026/01/20/what-gov-mikie-sherrills-first-executive-order-does-to-address-soaring-electric-bills-in-new-jersey/

LegiScan. (2026, July 7). New Jersey Senate Bill 1673 / Assembly Bill 2757. https://legiscan.com/NJ/bill/S1673/2026

LegiScan. (2026, July 7). New Jersey Senate Bill 4411. https://legiscan.com/NJ/bill/S4411/2026

Morris Focus. (2026, July 7). Governor Sherrill signs energy legislation, announces ratepayer bill credits. https://morrisfocus.com/2026/07/07/governor-sherrill-signs-energy-legislation-announces-ratepayer-bill-credits/

Natural Resources Defense Council. (2026, January 20). Governor Mikie Sherrill jump-starts clean energy progress with Executive Orders. https://www.nrdc.org/press-releases/governor-mikie-sherrill-jump-starts-clean-energy-progress-executive-orders

Natural Resources Defense Council. (2026, July 1). New Jersey passes trailblazing data center legislation. https://www.nrdc.org/press-releases/new-jersey-passes-trailblazing-data-center-legislation-governor-sherrill-expected

New Jersey Policy Perspective. (2026, July 7). New Jersey will hold data centers accountable for cost increases. https://www.njpp.org/media/statement/new-jersey-will-hold-data-centers-accountable-for-cost-increases/

New Jersey State Legislature. (2026, July 7). Assembly Bill 5188 / Senate Bill 4411 text & analysis. https://www.njleg.gov/bill-search/2026/A5188/bill-text?f=A5500&n=5188_R1

PA Environment Digest. (2026, July 14). PJM data center-driven power auction prices limited by $325/MW-day cap; missed reliability target by 6,831 MW. http://paenvironmentdaily.blogspot.com/2026/07/pjm-data-center-driven-power-auction.html

State of New Jersey. (2026, January 20). Gov. Sherrill Executive Orders No. 1 & No. 2 official text. https://dspace.njstatelib.org/bitstreams/d1ee01cb-1515-4c6c-9b9d-20b640de5a4e/download

Sys-O Technologies. (2026, July 16). PJM’s 2028/2029 BRA results: Reliability shortfall, capped prices. https://www.sysotechnologies.com/2026/07/16/pjm-2028-2029-bra-results/

Trustwave. (2026, June 2). New Jersey strategy on energy infrastructure & battery storage integration. https://support.trustwave.com/first-dry/New-Jersey-Governor-Sherrill-Proposes-Plan-to-Shield-Residents-From-Data-Center-Energy-Costs-29-8030

Utility Dive. (2026, January 21). New Jersey governor orders electric bill credits, development of VPP program. https://www.utilitydive.com/news/new-jersey-gov-sherrill-orders-electric-bill-credits-development-of-vpp-p/810085/

Utility Dive. (2026, August 4). Battery-eligible New Jersey VPP program begins to take shape. https://www.utilitydive.com/news/battery-eligible-new-jersey-vpp-program-begins-to-take-shape/826969/

WRNJ Radio. (2026, July 8). Gov. Sherrill signs energy bills, announces utility bill credits expected to save New Jerseyans $1 billion annually. https://wrnjradio.com/gov-sherrill-signs-energy-bills-announces-utility-bill-credits-expected-to-save-new-jerseyans-1-billion-annually/