This story was originally published by NJ Spotlight News, a content partner with South Jersey Climate News.
Already rising fast, electric bills in New Jersey are expected to continue increasing in coming years, after the regional power grid failed to secure enough energy to meet expected demand.
PJM Interconnection, which operates the power grid serving more than 67 million people across New Jersey and a dozen other states, released the results of its latest industry auction on Wednesday, with capacity prices hitting a record-high of $16.4 billion. Capacity prices cover the costs of supplying power to the electrical grid, which gets passed onto consumers.
The increase will hit in 2027, another 2% over this year’s expected double-digit rate hikes.
Beyond the cost, the auction marked the first time in PJM’s history that the grid operator failed to procure enough supply to meet expected demand. PJM said the auction fell about 6,600 megawatts short of the capacity needed to meet reliability requirements, in part driven by the proliferation of AI data centers.
“This auction leaves no doubt that data centers’ demand for electricity continues to far outstrip new supply, and the solution will require concerted action involving PJM, its stakeholders, state and federal partners, and the data center industry itself,” Stu Bresler, PJM’s executive vice president of market services and strategy, said in a statement. Bresler will take over as PJM’s chief operating officer in January.
That has energy experts concerned, and calling on PJM to bring more energy online and quickly.
“Summer 2027 will be the first time in PJM’s history it expects to not have enough power to reliably meet demand because of new data center forecasts and the ongoing risk of fossil fuel generators failing during winter storms,” Tom Rutigliano, a senior climate and energy advocate at the Natural Resources Defense Council, said in a statement. “Data centers are applying to connect to the grid much faster than the grid can keep up. Right now, PJM and its member utilities are promising power they simply don’t have.”
Advocates like Rutigliano have been urging PJM to streamline its process for connecting new clean energy sources to the grid in order to quickly grow power supplies. Increasingly, they’re also asking the grid operator to change how it handles new data center applications.
“Delays in building transmission, supply chain issues, barriers to siting new renewables, and PJM’s interconnection queue have combined to leave the region locked up and simply unable to build power plants. We’re throwing money in a hole right now,” Rutigliano said.
“PJM must take action to protect the public from cost and reliability impacts by requiring new data centers that want to connect to the grid bring their own capacity,” he said. “Otherwise, electricity bills will continue to rise and reliability will suffer. Worse, nearly all of the billions of dollars that customers will be charged will go to existing power plants, not to new supply and transmission infrastructure PJM desperately needs.”
Gov. Phil Murphy blasted the auction results on social media, posting that PJM had “failed” New Jerseyans.
“There is no way around the fact that we need to bring a significant amount of new generation online as quickly as possible. PJM needs to work in partnership with governors in our region to make that happen,” Murphy wrote in his post. “Otherwise next summer’s energy auction, without a price cap, will be disastrous for your electricity bill.”
Gov.-elect Mikie Sherrill has promised to take on the grid operator when she takes office in January, saying she will order an immediate freeze on any further rate increases.
