By: REBECCA SHEEHAN |
During the summer and winter months all homeowners agree, electricity prices are way too high. Keeping your home cool during the humid months and warm and toasty while it snows can take a huge chunk out of any working man’s paycheck. But don’t start sweating over these bills just yet because lower electricity just may be around the corner.
This week New Jersey is kicking off auctions in order to acquire billions of dollars of power to lower electricity rates for millions of homes and business throughout the state, says Reuters. The New Jersey auction is one of the biggest in the nation and is run by Basic Generation Service (BGS).
Electricity traders are estimating prices will decline because wholesale power is trading near its lowest levels in about 10 years due to weak natural gas prices from record shale production.
The PJM power grid, which spans over 13 Mid-Atlantic and Midwest states as well as the state of New Jersey, shows that natural gas is the fuel that is setting the price for electricity. Based on last year’s auction results, New Jersey acquired about 8,200 megawatts (MW) of power worth about $7 billion in two auctions. This year according to Reuters, the state is seeking about 8,700 megawatts (MW). To put the numbers in perspective – one megawatt powers about 1,000 New Jersey homes.
The first auction is for residential and small business customers for fixed-price power for three years. The state last year sought out 5,200 MW. The second auction will deal with hourly priced service for one year for larger commercial and industrial users. In 2012, New Jersey wanted about 3,000 MW. This year’s auction will end later next week.
The four investor-owned power companies in New Jersey are units of New Jersey’s Public Service Enterprise Group Inc (PSEG) , Washington, DC’s Pepco Holdings Inc, Ohio’s FirstEnergy Corp.