Board of Public Utilities Approves Electricity Auction Results

The New Jersey Board of Public Utilities (BPU) approved the results of the State’s 18th annual electricity auction for Basic Generation Service (BGS), resulting in stable energy costs for electricity supplied to residents and small and/or medium-sized businesses by Public Service Electric & Gas Company (PSE&G), Jersey Central Power & Light Company  (JCP&L), Rockland Electric Company (RECO), and Atlantic City Electric Company (ACE) (collectively the New Jersey Electric Distribution Companies or EDCs).

The BGS auction determines, in part, the cost of electricity for most New Jersey residents and many businesses for a twelve-month period starting June 1, 2019. Winning prices for each of the four EDCs increased between 2.4% and 7.6% compared to last year’s auction. However, due in part to the fact that winning contracts are, for the most part, replacing older, slightly more expensive contracts from three years ago, the average monthly BGS residential ratepayer bill will remain relatively unchanged.  Specifically, residential ratepayers supplied by PSE&G will see an average estimated bill increase of 0.3%, ratepayers supplied by JCP&L will see an average estimated bill decrease of 2.2%, ratepayers supplied by ACE will see an average estimated bill increase of 0.8%, and ratepayers supplied by RECO will see average estimated bill decrease of 0.5%.

“The weighted average energy cost is based upon the results from the last three auctions. As a result, in 2019, the BGS ratepayer will experience stable energy costs,” said Joseph L. Fiordaliso, President of the New Jersey Board of Public Utilities. “The Board will continue to monitor transmission proceedings at FERC, consistent with the goals of the Murphy Administration.”

The following table illustrates how the auction results will affect electricity supply costs for the average residential customer when the new rates take effect on June 1, 2019:

Utility Company
Usage (kWh) Current Bill Increase

or Decrease

New Bill Percent Change
ACE 650 $114.26 $0.90 $115.16 0.8%
JCP&L 650 $90.81 -$2.03 $88.78 -2.2%
PSE&G 650 $115.00 $0.35 $115.35 0.3%
RECO 650 $113.98 -$0.59 $113.39 -0.5%

The Board’s approval of the BGS results covers two separate descending clock auctions conducted by NERA Economic Consulting beginning February 1 and ending February 5. The auction for Commercial and Industrial Energy Price (CIEP) service for large commercial and industrial customers ran from February 1 through February 4; and the auction for Residential and Small Commercial Pricing (RSCP) service for residential and small to medium sized commercial customers ran from February 4 through February 5. Both auctions secured commitments for up to approximately $6 billion worth of purchases covering approximately 7,800 megawatts (MWs) of customer requirements.

The energy secured in the RSCP auction will meet one-third of the state’s residential and small business electric load requirements for the next three energy years, starting June 1, 2019. The remaining two-thirds of customer supply requirements for the 12-month time period beginning June 1, will be met by electric supply secured in the BGS Auctions of 2017 and 2018. The supply acquired through the CIEP auction is for one year. The state’s four regulated electric distribution companies do not earn a profit on the cost of the electric supply secured in the auctions.  These costs are passed through directly to ratepayers.

For CIEP ratepayers, when compared to last year, the prices for all EDCs are either stable or lower. The CIEP price is primarily driven by the cost of electric generating capacity from PJM’s Reliability Pricing Model (RPM) Auction and the cost of meeting the State Renewable Portfolio Standard (RPS). Capacity prices for all EDCs decreased this year. The CIEP price constitutes only a small portion of monthly bills of CIEP customers for the period from June 1, 2019 to May 31, 2020; the price of other components has remained fairly stable.

The CIEP product is a full requirements product for which the Board bids out certain components and relies on spot prices for energy. As of December 2018, approximately 83% of the CIEP load is being provided through individual contracts with third-party suppliers. These contracts are negotiated in the competitive marketplace and are not affected by the CIEP auction results.

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