NJ Electricity Bills Surge: Investigation Demanded After Auction Prices Skyrocket

New Jersey families and businesses are bracing for a sharp increase in electricity bills, with monthly costs expected to climb by $20 to $25. The culprit? A regional energy auction that saw prices soar nearly tenfold, from $2.2 billion last year to $14.7 billion for the 2025/2026 delivery period. The dramatic spike has sparked alarm across the state, prompting Governor Phil Murphy to call for a federal investigation into potential market manipulation.

The auction, managed by PJM Interconnection, a regional grid operator serving over 65 million people across 13 states, determines how much power generators are paid to ensure a reliable electricity supply. This year’s results, however, have raised questions about fairness and transparency, with critics arguing the process may have been skewed to favor certain market players, leaving consumers to foot the bill.

For residents like Maria Torres, a small business owner in Newark, the increase feels like a blow out of nowhere. 'We’re already stretched thin,' she said. 'Higher energy costs mean I might have to raise prices or cut hours.' Her story reflects a broader concern: rising energy prices are squeezing households and businesses at a time when economic pressures are already mounting.

The 2024 Base Residual Auction, designed to secure electricity capacity for 2025/2026, produced a clearing price of $269.92 per megawatt-day, up from $28.92 the previous year. Independent market monitors flagged several issues, including the withholding of certain resources that could have lowered prices. They argue the auction’s outcome didn’t reflect true supply and demand, resulting in payments roughly double what was necessary.

State officials, including those in New Jersey, Pennsylvania, and Maryland, have pointed to flaws in PJM’s market rules, such as stricter reliability requirements and the exclusion of some power units. These changes, they say, may have allowed generators to exert undue influence over prices. The Maryland Office of People’s Counsel has filed a formal complaint with the Federal Energy Regulatory Commission (FERC), alleging anti-competitive behavior.

PJM, for its part, defends the auction, citing increased demand forecasts and the need to ensure grid stability during extreme weather. Yet the organization has acknowledged shortcomings and is working on reforms to prevent similar spikes in future auctions. Meanwhile, the immediate impact is clear: higher costs are being passed on to consumers, with some regions facing bill increases of up to 29%.

The PJM auction controversy is part of a larger story unfolding across the United States, where electricity rates have risen in two-thirds of states over the past year. Nationally, residential customers are paying an average of 16.8 cents per kilowatt-hour in 2025, a 2% increase from 2024, with some areas seeing far steeper hikes. For businesses, particularly in energy-hungry sectors like manufacturing, these costs threaten profitability and could ripple through the economy.

Historical parallels offer context. During the California energy crisis of 2000-2001, market manipulation led to blackouts and skyrocketing prices, exposing vulnerabilities in deregulated energy markets. While today’s situation is less severe, the concerns are similar: complex market designs can create opportunities for manipulation, and consumers often bear the brunt of the fallout.

On the flip side, some experts argue that rising costs reflect the growing pains of a transitioning energy system. Increased demand from data centers, electric vehicles, and electrification, combined with the retirement of aging power plants, is straining grids. Regional operators like PJM are tasked with balancing reliability and affordability, a challenge made harder by volatile natural gas prices and new tariffs on energy imports.

In response, New Jersey and other states are taking action. Governor Murphy, alongside counterparts in Pennsylvania, Illinois, and Maryland, has pressed FERC to investigate the auction and hold PJM accountable. Their advocacy recently led to a PJM agreement to save consumers $21 billion over two years, though critics say more systemic fixes are needed to prevent future price shocks.

At the state level, New Jersey is doubling down on renewable energy and storage to reduce reliance on volatile auctions. The state surpassed five gigawatts of solar capacity last year and plans to launch a storage incentive program this summer. These efforts aim to lower costs and emissions while boosting grid resilience. Yet challenges remain, including permitting delays and the slow pace of connecting new projects to the grid.

Nationally, the Inflation Reduction Act is fueling investments in clean energy, with $338 billion poured into renewables and storage in 2024 alone. Battery storage, in particular, is booming, with costs dropping to $115 per kilowatt-hour and installations expected to grow 76% this year. Still, experts warn that the transition to a cleaner grid won’t fully offset rising costs in the short term, leaving consumers vulnerable.

As New Jersey awaits FERC’s response, the debate over energy costs underscores a delicate balance: ensuring a reliable grid while keeping electricity affordable. For now, families and businesses are left navigating the immediate reality of higher bills, with low-income households hit hardest. State programs offering utility bill assistance and energy efficiency upgrades provide some relief, but they’re not a long-term fix.

The path forward hinges on transparency, reform, and innovation. A thorough federal investigation could shed light on whether manipulation drove the auction’s outcome, paving the way for fairer markets. Meanwhile, investments in renewables and storage offer hope for a more stable, sustainable energy future, even as the road to get there remains bumpy.