The New Jersey Board of Public Utilities (NJBPU) today approved the results of the state’s 22nd annual electricity auction for Basic Generation Service (BGS), resulting in slightly higher rate for electricity supplied to most residents and small and/or medium-sized businesses by Atlantic City Electric Company (ACE), Jersey Central Power & Light Company (JCP&L), Public Service Electric & Gas Company (PSE&G), and Rockland Electric Company (RECO), collectively, the New Jersey Electric Distribution Companies (EDCs).
“The average bill is based, in part, upon the results from the last three BGS auctions. As a result, in 2023, BGS ratepayers will experience an increase in energy costs that are generally at or below the current rate of inflation,” said Joseph L. Fiordaliso, president of the New Jersey Board of Public Utilities.
The BGS auction determines, in part, the cost of electricity for most New Jersey residents and many businesses for a 12-month period starting June 1, 2023. Winning prices for all four EDCs increased compared to last year’s auction mainly due to higher energy costs and the risk of providing a fixed-price product. The average monthly BGS residential ratepayer bill is expected to increase for most customers. The average monthly bill will increase anywhere from 3.3% to 6.9%. Specifically, ratepayers supplied by PSE&G will see an average estimated bill increase of 3.3%, ratepayers supplied by JCP&L will see an average estimated bill increase of 4.8%, ratepayers supplied by ACE will see an average estimated bill increase of 4.1%, and ratepayers supplied by RECO will see average estimated bill increase of 6.9%.
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, 2023:
Monthly Impact of BGS Auction on Average Residential Accounts
|Usage (kWh)||Current Bill||Increase
|New Bill||Percent Change|
The Board’s approval of the BGS results covers two separate descending clock auctions conducted by NERA Economic Consulting beginning Feb. 3 and ending Feb. 6. The auction for Commercial and Industrial Energy Price (CIEP) service for large commercial and industrial customers was conducted on Feb. 3, and the auction for RSCP service for residential and small- to medium-sized commercial customers was conducted on Feb. 6. Both auctions secured commitments for approximately 7,403 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, 2023. The remaining two-thirds of customer supply requirements for the 12-month time period beginning June 1, 2023 will be met by electric supply secured in the BGS Auctions held in 2021 and 2022. The supply acquired through the CIEP auction is for one year. The state’s four regulated EDCs 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 higher. 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). The CIEP price constitutes only a small portion of monthly bills of CIEP customers for the period from June 1, 2023 to May 31, 2024.
The CIEP product is a full requirements product. The energy portion of the product is priced at the spot price of energy. The price in the auction is meant to cover the costs of capacity and meeting the State RPS. As of November 2022, approximately 81% of the CIEP load is being provided through individual contracts with third-party suppliers.
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