NJBPU Hosts Technical Conference on Energy Cost Drivers

By Jim Pytell, Managing Editor On Aug 6, 2025

PJM Interconnection recently announced the results of its 2026/2027 Base Residual Auction (BRA), which secured the projected electricity needs for more than 67 million people across 13 states and Washington, D.C. 

The auction closed at record highs for a second year in a row, hitting a price cap of $325/MW-day. This 22% increase in capacity prices follows last year’s BRA that saw an 800% jump. As a result, many New Jersey ratepayers have seen a 20% cost increase in their electric bills.

The BRA operated under new price constraints established earlier this year — a $325 per megawatt-day ceiling and $175 per megawatt-day floor — following advocacy from New Jersey and other states like Pennsylvania after last year’s 800% price increase to $269.92/MW-day for the 2025/2026 auction for most of the PJM region.

Yesterday, the New Jersey Board of Public Utilities (NJBPU) hosted a technical conference on resource adequacy at The College of New Jersey (TCNJ), which marked the first public forum where the 2026/2027 BRA results were discussed. The conference included discussion from stakeholders, including those from New Jersey utility companies, the NJBPU and PJM, as well as public comments and questions.

During the conference, Dr. Joseph Bowring, independent market monitor for PJM, said that the maximum capacity price is expected to continue to be exceeded for the next five to ten years, primarily due to data center load growth.

While he noted that technological innovation could eventually lead to a more efficient overall grid and alleviate some stress, in the near term, the forecasted demand is driving the prices.

“The real issue is the role of data center load growth,” Bowring said. “It is not just part of demand growth. It is a paradigm change in the way the market is working.”

Complicating matters, Bowring added that it is not possible to correctly forecast demand for data centers because they often operate under a shroud of secrecy, mainly driven by a combination of security concerns and competitive advantages.

“The forecast is unverifiable,” he said. “They are competing with one another.”

Bowring noted that, aside from delaying data centers from coming online until the grid can handle them, one solution, in his view, is to “bring your own generation,” in which data centers develop their own on-site power generation to meet their electricity needs rather than relying solely on the grid.

NJBPU President Christine Guhl-Sadovy, said that, “There is not one best solution, but at the end of the day we cannot have our consumers in New Jersey subsidizing the cost of large data centers coming online, particularly when – admittedly – the large data centers are willing to pay for a quicker time to power and faster interconnection. The status quo is not acceptable, and all options must be on the table to address capacity cost increases,” said Guhl-Sadovy.

She also noted that it is important that New Jersey avoids enacting policies that would drive data centers to other states and raise costs for everyone else.

In the most recent edition of New Jersey Business Magazine, Ray Cantor, NJBIA Deputy Chief Government Affairs Officer, wrote that if New Jersey is to be the AI innovation state, as Governor Murphy has proclaimed, it must be able to attract high-tech data centers. 

“Some lawmakers have promoted bills to either require data centers to ‘bring their own energy’ or ‘punish’ them through higher rates,” Cantor added. “Rather than discourage data center growth, we should be like Pennsylvania, which has developed ample energy supplies. As a result, Amazon recently announced it is spending $20 billion to develop data centers in that state. New Jersey is on the sidelines watching its neighbor prosper. If we want to be a leader in AI, we need to also be a leader in energy development.”

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