The increase in electricity prices facing New Jersey consumers deserves the attention it’s getting. Paying a higher cost for any good or service, especially one so critical to everyday life, is never welcome.

A number of the state’s elected officials have called out PJM Interconnection as the root cause of rising electricity prices. Much of this rhetoric is misdirected and far from fair, but PJM does have an important story to tell about what’s actually happening today — not just in New Jersey, but across our footprint and around the country.

That story has to begin with, who is PJM anyway? Founded in 1927 in southeastern Pennsylvania, PJM Interconnection is the electricity grid operator for 13 states, including the Garden State, and Washington, D.C. PJM is a nonprofit entity that is fully regulated by the Federal Energy Regulatory Commission.

PJM monitors and coordinates more than 1,400 generation sources and nearly 90,000 miles of high-voltage transmission lines. We are sometimes called the air traffic controllers of the power grid; we don’t own any of the transmission lines or generators, but we direct the lowest-cost electricity to where it’s needed most. Generators, utilities and power marketers coordinate their operations through PJM. Doing so makes power outages less likely to occur and reduces electricity costs.

In addition to operating the grid each day, PJM also runs power markets that help to support the reliable delivery of electricity both in real time and in the future.

In 2007, PJM developed its current capacity market to use the power of markets to commit enough resources to meet future power demand needs. The establishment of a three-year-forward auction allowed for competition between existing and new resources while attracting participation from across the PJM region. This design created a wide scope for the market and provided transparent price signals to attract investment in new generation and allow for the retirement of less efficient resources.

Last summer, PJM ran its most recent capacity auction, which saw prices increase significantly from the previous auction. The result of the increase was primarily based on a clear imbalance between electricity supply and demand.

In fact, for more than two years, PJM has been warning of the supply and demand conditions that would lead to these increases throughout every state legislature across our footprint and through numerous testimonial opportunities before the U.S. House and Senate.

Power plants that generate electricity are retiring due primarily to state and federal decarbonization policies and some economic pressures. Simultaneously, demand is increasing due to the power requirements of artificial intelligence, data centers, electrification and a resurgence in U.S. manufacturing. When supply decreases and demand increases in any market, the result is an increase in pricing.

To deflect the issue, numerous New Jersey legislators have called out PJM and its interconnection process and delays with bringing new renewable resources online as the primary culprit for driving higher capacity prices. Their numbers are consistently, wildly and willingly wrong. Here is the reality:

• PJM’s updated interconnection process was granted Federal Energy Regulatory Commission approval in late 2022.
• There are approximately 63 gigawatts of projects remaining in our queue that will be through the process in 2025 and 2026.
• More importantly, there are another 46 GW of projects that have cleared PJM’s interconnection process and are free to build and plug into the grid — enough energy to power about 40 million homes. The overwhelming majority of these projects are renewables.

Critics will cite dated statistics to drive a narrative that PJM is the problem, but the fact is that PJM has been moving hundreds of these projects through our study process, and will continue to do so. We recently hit a solar generation record of nearly 12 GW in April, in addition to a carbon-free generation record of over 60%; that’s real progress that reflects the work that has been done and will continue.

Some politicians also seem to have forgotten about the two years PJM spent helping New Jersey advance its offshore wind goals. The state invested heavily in the construction of 11,000 megawatts of offshore wind for new supply, and this supply did not materialize. PJM worked hard with New Jersey officials — productively and in good faith — to prepare for the connection of these wind turbines to the grid. New Jersey even praised PJM for saving $900 million for taxpayers through our competitive planning process.

Those wind turbines could have helped to alleviate the current supply and demand imbalance, but their chosen suppliers, like Danish company Ørsted, walked away, leaving a hole in the state’s plans for new electricity generation. That had nothing to do with PJM.

Other renewable resources are welcome additions to the grid but are currently having their own construction challenges, including issues with siting and permitting. That is a simple fact that doesn’t receive enough attention. We have encouraged lawmakers to help developers overcome these challenges to get their projects built; that’s a far more productive exercise than searching for scapegoats for the scarcity issues impacting us all.

PJM has been very clear about our concerns with these supply and demand conditions. We work with politicians on both sides of the aisle; we are apolitical by definition. Attempting to place blame on a federally regulated, profit-neutral grid operator whose primary mission is to keep the lights on may win political points with some. But those who call New Jersey home deserve better.