SR133

A Senate Resolution respectfully urging the Federal Energy Regulatory Commission to reject the results of PJM Interconnection, L.L.C.’s 2025/2026 Base Residual Auction and to rebid the auction.

Whereas, PJM Interconnection, L.L.C. (PJM) is the regional transmission organization responsible for operating the electric transmission system, also known as the grid, and coordinating electricity distribution across several states, including New Jersey, and the District of Columbia; and

Whereas, PJM is responsible for developing market and reliability rules aimed at ensuring reliable and cost-effective energy to power homes and businesses in New Jersey, the other PJM states, and the District of Columbia; and

Whereas, PJM’s Reliability Pricing Model, commonly referred to as PJM’s capacity market, was designed to secure adequate energy resources for the electric grid for three years following each auction and to meet certain energy reliability goals; and

Whereas, One of PJM’s responsibilities is to administer its Reliability Pricing Model Base Residual Auction (BRA), commonly referred to as PJM’s capacity auction, to procure sufficient capacity to handle peak loads and to provide affordable, reliable electricity; and

Whereas, In July 2024, PJM held its BRA for the 2025/2026 Delivery Year (July 2024 BRA), which resulted in a resource clearing price that was nearly 10 times higher than that of the prior capacity auction; and

Whereas, The resulting price spike following the July 2024 BRA is unprecedented for PJM, and will translate to rising electric costs for customers; and

Whereas, The Organization of PJM States, Inc. (OPSI), of which the New Jersey Board of Public Utilities is a member, and the Independent Market Monitor (IMM) for PJM found that certain flaws in the PJM capacity market construct left the July 2024 BRA susceptible to market manipulation and resulted in capacity clearing prices that fail to accurately reflect supply and demand fundamentals; and

Whereas, The OPSI has also expressed concern that the July 2024 BRA’s clearing prices may have been driven, in part, by artificial scarcity of supply created by flaws in PJM’s capacity market construct; and

Whereas, The results of the July 2024 BRA directly affect New Jerseyans as most New Jersey ratepayers are served through the Basic Generation Service (BGS) auction, by which New Jersey’s four major electric public utilities procure a supply of electricity to serve the majority of residential, small commercial, and industrial ratepayers across the State; and

Whereas, The capacity price set by the PJM BRA is passed through the BGS auction to New Jersey ratepayers, and has been projected to increase the average monthly electric bill in New Jersey by approximately 17 to 20 percent beginning in June 2025; and

Whereas, Although the results of the July 2024 BRA directly impact New Jersey ratepayers, because PJM is regulated by the Federal Energy Regulatory Commission, the New Jersey Board of Public Utilities has no control over the results of the BRA; and

Whereas, As the July 2024 BRA resulted in exorbitant electricity price increases for New Jersey customers and has prompted serious concerns about flaws in the PJM capacity market construct and potential market manipulation, it is fitting and proper for this House to respectfully urge the Federal Energy Regulatory Commission to reject the results of the 2025/2026 Reliability Pricing Model Base Residual Auction and rebid the auction; now, therefore,

Be It Resolved by the Senate of the State of New Jersey:

1. This House respectfully urges the Federal Energy Regulatory Commission to reject the results of PJM Interconnection, L.L.C.’s 2025/2026 Reliability Pricing Model Base Residual Auction and to rebid the auction.

2. Copies of this resolution, as filed with the Secretary of the Senate, shall be transmitted by the Secretary of the Senate to the Chairman and Commissioners of the Federal Energy Regulatory Commission.

STATEMENT

This resolution respectfully urges the Federal Energy Regulatory Commission (FERC) to reject the results of the 2025/2026 Reliability Pricing Model Base Residual Auction and to rebid the auction.

PJM Interconnection, L.L.C. (PJM), which is regulated by FERC, is responsible for operating the electric transmission system, also known as the grid, and coordinating electricity distribution across 13 states, including New Jersey, and the District of Columbia. PJM is also charged with developing market and reliability rules aimed at ensuring reliable and cost-effective energy to power homes and businesses across the PJM states, including New Jersey.

PJM’s Reliability Pricing Model, commonly referred to as PJM’s capacity market, was designed to secure adequate energy resources for the grid and to meet energy reliability goals. PJM is responsible for administering its Reliability Pricing Model Base Residual Auction (BRA), also known as PJM’s capacity auction, to procure sufficient capacity to handle peak loads and to provide affordable, reliable electricity.

In July 2024, PJM held its BRA for the 2025/2026 Delivery Year (July 2024 BRA), which resulted in a clearing price nearly 10 times higher than that of the prior capacity auction. This unprecedented price spike will translate to rising electric costs for customers.

Following the July 2024 BRA, the Organization of PJM States, Inc. (OPSI), of which the New Jersey Board of Public Utilities is a member, and the Independent Market Monitor (IMM) for PJM found that certain flaws in the PJM capacity market construct left the July 2024 BRA susceptible to manipulation and resulted in capacity clearing prices that fail to accurately reflect supply and demand fundamentals. The OPSI also noted that the July 2024 BRA’s clearing prices may have been driven, in part, by artificial scarcity of supply created by flaws in PJM’s capacity market construct.

The results of the July 2024 BRA directly affect New Jerseyans as most New Jersey ratepayers are served through the Basic Generation Service (BGS) auction, by which New Jersey’s four major electric public utilities procure a supply of electricity to serve the majority of residential, small commercial, and industrial ratepayers across the State. The capacity price set by the PJM BRA is passed through the BGS auction to New Jersey ratepayers, and has been projected to increase the average monthly electric bill in New Jersey by approximately 17 to 20 percent beginning in June 2025.

The July 2024 BRA resulted in exorbitant electricity price increases for New Jersey customers and has prompted serious concerns about flaws in the PJM capacity market construct and potential market manipulation. Thus, it is fitting and proper for this House to respectfully urge the FERC to reject the results of the 2025/2026 Reliability Pricing Model Base Residual Auction and to rebid the auction.