Op New Jersey has lifted the veil on its power grid—pushing PJM Interconnection to become more transparent. While this move won’t cut rates overnight, it marks a pivotal shift toward accountability and long-term energy reform.
“These bills complement our long-term plan of action to hold PJM responsible for hardworking New Jerseyans’ skyrocketing electricity bills and a lack of new energy generation,” Governor Murphy said in a press statement. “We are committed to creating a system that is fairer and more transparent for customers and the states that represent them – a necessary change from the opaque practices that have, for too long, defined PJM.”
What Is PJM?
PJM is a regional transmission organization that includes more than 1,100 member utilities serving more than 65 million people. Its territory includes all or parts of Delaware, Illinois, Indiana, Kentucky, Michigan, North Carolina, Ohio, Tennessee, Virginia, West Virginia, the District of Columbia, and of course, Pennsylvania, New Jersey, and Maryland.
PJM is responsible for the safety, reliability, and security of the bulk power transmission system in its footprint. Per its mandate from the Federal Energy Regulatory Commission (FERC), PJM is a nonprofit entity that does not sell electricity to end users, nor does it own any equipment such as generators or power lines.
Instead, PJM coordinates the movement of electricity across its service territory with the management of a wholesale electricity market. Additionally, it operates a capacity market that takes a longer-term view on electricity supply and demand. Every year, PJM holds an auction to secure enough power to meet the peak demand it expects in three years.
PJM members, including electric public utility companies, vote on transmission policies and market rules that impact ratepayers in New Jersey and across the regional grid, which raises concerns about conflicts of interests. For instance, many holding companies that supply power in the state have numerous affiliates, which may all hold voting rights.
Critics of PJM further contend that capacity prices do not align with the principles of affordability and transparency outlined in New Jersey’s “Electric Discount and Energy Competition Act.” They also maintain that delays in PJM’s interconnection queue have prevented new electric generation resources from becoming operational in a timely manner. As a result, these new resources, which are needed to maintain reliability at low costs, will be unable to compete in PJM’s capacity market auctions in the near future.
What Do the New Grid Transparency Laws Do?
On August 15, Gov. Phil Murphy signed legislation into law aimed to increase public accountability and transparency in decision-making by PJM and its members. The legislation comes as New Jersey ratepayers have seen their monthly electric bills increase up to 20 percent after PJM’s capacity auction in 2024, requiring the state to fund a $430 million relief package for ratepayers.
The first new law, Assembly Bill 5463, aims to increase transparency and accountability around how decisions made at PJM may impact electricity reliability, affordability, and sustainability. It mandates that electric public utilities and their affiliates operating in New Jersey disclose details on their voting at PJM and report to the BPU annually.
The report is required to: (1) list each recorded vote cast by the electric public utility, and by any affiliate of the utility, at a meeting of PJM during the immediately preceding calendar year, regardless of whether the vote is disclosed by PJM; (2) include a brief description of what transpired at the meeting, including the purpose of the meeting, the meeting agenda, if any, and what role the electric public utility, or its affiliate, played at the meeting; and (3) include a brief description explaining whether each vote that was cast furthers the State’s goals of prioritizing the affordability, reliability, and sustainability of electricity production, consumption, and conservation.
Pursuant to Senate Joint Resolution 154, the Board of Public Utilities must investigate whether PJM’s Reliability Pricing Model is serving its intended design to obtain resource adequacy at the lowest possible cost and report the results of itsinvestigation to the Governor and the Legislature within 12 months. The Resolution also directs the State of New Jersey to collaborate with neighboring states to promote affordable energypractices and to urge PJM to implement market reforms and expeditiously review new electricity generation applications.
What’s Next?
New Jersey’s new laws won’t result in changes overnight, but they do improve transparency on behalf of both JPM and voting utilities. There is also strength in numbers. Maryland and Delaware have similar laws in place. In addition, at least eight other states have introduced legislation, including Pennsylvania, Illinois and Virginia.
