- Most residential rates down 3 to 5 percent
- Auction secures 8,700 MW of power worth about $7 billion
- Commercial and industrial power costs to rise
By: Scott DiSavino |
New Jersey utility regulators on Thursday approved the results of two electricity auctions that will lower power prices for most of the state’s homes and businesses starting June 1.
The state Board of Public Utilities (BPU) said in a release the value of the auctions was about $7 billion for 8,700 megawatts (MW) of power capacity.
Customers of Public Service Electric and Gas (PSE&G), the biggest power company in the state, however will see steady prices due to large costs related to major transmission upgrades in that utility’s service area, regulators said.
PSE&G is a unit of New Jersey power company Public Service Enterprise Group Inc (PSEG).
The BPU said the results of this year’s auction continues a four-year streak, starting in 2010, of decreasing or stable energy costs for residential and small business customers.
Since 2009, energy costs for residential customers have fallen about 30 percent, the BPU said.
Electricity traders noted power prices are near decade lows because natural gas prices were also near decade lows due to record shale production. Gas-fired plants set the price for power in much of the country, including New Jersey.
This was the state’s 12th auction for Basic Generation Service (BGS), which supplies power for those customers who choose not to switch from their regulated utility to a competitive energy supplier.
The four regulated power companies in New Jersey are units of PSEG, Pepco Holdings Corp, FirstEnergy Corp and Consolidated Edison Inc.
The BPU said this year’s auction was expected to reduce the cost of electricity for most residential ratepayers from 3 to 5.5 percent depending on their utility. PSE&G rates will remain flat.
“New Jersey’s competitive auction for electricity has again contributed to falling electricity costs for most residents and many business customers across the state,” Board President Bob Hanna said in a statement.
The winning bidders in the auctions included units of BP PLC, Exelon Corp, Macquarie Group Ltd, Morgan Stanley, NextEra Energy Inc, PSEG, TransCanada Corp, ConocoPhillips, Dominion Resources Inc, DTE Energy Co and PPL Corp.
The Board’s approval covers the results of two separate auctions, which occurred over three business days.
The first auction, which began and ended on Feb. 1, was for large commercial and industrial customers. The second auction, which began on Feb. 4 and ended on Feb. 5, was for fixed price service used primarily by residential and small to medium sized commercial customers.
The energy secured in the fixed-price auction will meet one-third of the state’s residential and small business electric demand for the next three years, starting June 1. The remaining two-thirds of demand for the twelve-month period will be met by generation secured in the auctions of 2011 and 2012.
The supply acquired for commercial and industrial customers is for one year.
About 88 percent of commercial and industrial customers buy power from competitive suppliers and therefore do not rely on the auction.
The state said prices from the auction for commercial and industrial customers increased in all utility service areas due to higher power capacity prices and increased solar power requirements.
The state’s four utilities do not earn a profit on the cost of the generation secured in the auctions. These costs are passed through directly to ratepayers.
Monthly Impact of Auction on Average Residential Accounts
|Utility||Usage (kWh)||Current Bill||Decrease / Increase||New Bill||Percent Change|
- Kilowatt hours (kWh)
- Atlantic City Electric is a unit of Pepco
- Jersey Central Power & Light (JCP&L) is a unit of FirstEnergy
- PSE&G is a unit of PSEG
- Rockland Electric is a unit of Con Edison