Pallone Urges FERC to Act as NJ Electricity Prices Surge, Warns Residents Face Another Spike

WASHINGTON, D.C.— With electricity costs climbing across New Jersey, House Energy and Commerce Committee Ranking Member Frank Pallone, Jr. (NJ-06) is pressing federal regulators to step in before ratepayers are hit with another increase.

In a letter sent today to Federal Energy Regulatory Commission (FERC) Chairman Laura Swett, Pallone called for immediate approval of PJM Interconnection’s proposal to extend its price cap for upcoming capacity auctions, arguing that failure to act will leave New Jersey residents exposed to another round of sharp cost hikes.

“I urge you to approve PJM Interconnection’s proposal to extend its price cap for the upcoming capacity auctions and prevent New Jersey residents from absorbing yet another sharp increase in their electricity costs. When PJM fell behind in connecting new sources of energy generation to the grid, electricity ratepayers in New Jersey and throughout PJM’s territory were punished for that incompetence,” wrote New Jersey’s 6th District Congressman.

Electricity prices across the PJM region have already surged following increases in capacity auction prices, with average residential rates in New Jersey now roughly 18 percent higher than they were a year ago. The current price cap has helped limit additional increases this year, but that protection is set to expire without further action from FERC.

Pallone pointed to PJM’s ongoing failure to connect new sources of energy to the grid as a central driver of the problem, leaving supply constrained while demand continues to rise. As a result, ratepayers across New Jersey and the broader PJM region are bearing the cost of those delays.

At the same time, broader market pressures are compounding the situation. Supply chain disruptions tied to tariffs and the repeal of key energy tax credits under Republicans’ “Big Ugly Bill” have made it more difficult for developers to bring new power generation online. Those challenges are expected to persist through the end of the decade, raising concerns about whether sufficient electricity supply will be available to meet demand in 2029 and 2030.

Pallone argued that extending the price cap for two additional auction cycles would provide a necessary pause, giving regulators, states, and Congress time to pursue longer-term solutions to stabilize the grid and protect consumers. He also noted that growing electricity demand from data centers and artificial intelligence is adding new pressure to the system, making timely action even more critical.

“While the price cap is not a silver bullet for the problems facing the PJM region, extending it is a critical first step toward prioritizing affordability.  Without it, I am concerned that other reforms and changes to our region’s electricity system will not be able to protect New Jersey families and small businesses from higher energy bills,” Pallone wrote.

The public comment period for PJM’s proposal ends tomorrow, Friday, March 20.

Full letter can be found here and below:

The Honorable Laura V. Swett

Chairman

Federal Energy Regulatory Commission

888 First Street NE

Washington, DC 20426

RE: PJM Interconnection, L.L.C., Docket No. ER26-1556

Dear Chairman Swett:

I urge you to approve PJM Interconnection’s  proposal to extend its price cap for the upcoming capacity auctions and prevent New Jersey residents from absorbing yet another sharp increase in their electricity costs. When PJM fell behind in connecting new sources of energy generation to the grid, electricity ratepayers in New Jersey and throughout PJM’s territory were punished for that incompetence.  The Federal Energy Regulatory Commission (FERC) must act to extend the price cap because New Jersey residents and businesses cannot shoulder additional energy price increases.

New Jersey families are facing an electricity cost crisis and they deserve immediate relief. As you know, the increase in PJM’s capacity price starting with the 2025/2026 Base Residual Auction (BRA) has caused retail electricity prices to spike across the PJM footprint, including in New Jersey where the average residential rates are now 18 percent higher than they were a year ago.[1]  That means the typical New Jersey household saw their annual electricity bill increase by more than $300 per year.[2]  PJM’s existing price cap was absolutely vital to ensuring that residential rates in New Jersey will see relatively limited increases this year.[3]  But without action from FERC, that limited reprieve will disappear.

There is only one solution to PJM’s problems: ensuring there is a sufficient supply of electricity to meet demand, but PJM’s antiquated processes for interconnecting new sources of power to the grid will prevent significant amounts of electricity from coming online by the end of the decade.  Making matters worse is the chaos in energy supply chains resulting from President Trump’s illegal tariffs and the foolish repeal of energy tax credits last year in Republicans’ Big Ugly Bill.[4]^,[5]  Combined, these factors erode any ability for power plant developers to build new power plants in PJM’s territory in time to serve the region’s needs in 2029 or 2030.  That is why FERC must grant relief for PJM’s ratepayers by extending the price cap for two more auction cycles.

As PJM noted in its transmittal letter, this filing is just one in a suite of filings that PJM plans to make over the course of this year to reform its markets.  However, those filings and incremental auctions will not come until afterthe 2028/2029 BRA – leaving ratepayers who will pay for the costs of that auction in limbo, unless FERC acts.[6]  If FERC acts expeditiously, it will give PJM, its states, and Congress time to debate and enact other vital reforms to safeguard ratepayers from increasing electricity prices driven by data centers fueling artificial intelligence tools. You must allow time for this process and allow energy system operators and regulators the opportunity to chart a more stable path.

I appreciated the commitment you made to prioritize affordability at an Energy Subcommittee hearing last month.  While the price cap is not a silver bullet for the problems facing the PJM region, extending it is a critical first step toward prioritizing affordability.  Without it, I am concerned that other reforms and changes to our region’s electricity system will not be able to protect New Jersey families and small businesses from higher energy bills.  I appreciate your consideration and, as always, stand ready to work with you and your colleagues to make electricity more affordable.

Sincerely,

Frank Pallone, Jr.

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[1] U.S. Energy Information Administration, Electric Power Monthly: Average Price of Electricity to Ultimate Customers by End-Use Sector(Feb. 24, 2026) (https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_06_a)

[2] New Jersey Board of Public Utilities, NJBPU Announces Conclusion of New Jersey’s Annual Electricity Supply Auction (March 18, 2026) (https://www.nj.gov/bpu/newsroom/2025/approved/20250212.html)

[3] New Jersey Board of Public Utilities, New Jersey Board of Public Utilities Certifies 2026 Electricity Auction Results (Feb. 12, 2026) (https://www.nj.gov/bpu/newsroom/2026/approved/20260212.html)

[4] David Yellen and Sagatom Saha, Policy Brief: How Tariffs are Undermining U.S. Energy and Economic Security, Clean Air Task Force (June 4, 2025) (https://www.catf.us/resource/policy-brief-how-tariffs-undermining-us-energy-economic-security/)

[5] Marina Domingues, Matthew Bernstein, and Katie Keenan, Trump’s ‘Big Beautiful Bill’ Transforms Supply Chains, Undercuts Renewables and Recalibrates Energy Finance, Rystad Energy (Sep. 3, 2025) (https://www.rystadenergy.com/insights/trump-s-big-beautiful-bill-transforms-supply-chains-undercuts-renewables-and-reca)

[6] Letter from Craig Glazer, Vice President–Federal Government Policy, PJM Interconnection, L.L.C. and Chenchao Lu, Associate General Counsel, PJM Interconnection, L.L.C., to Debbie-Anne A. Reese, Secretary, Federal Energy Regulatory Commission (February 27, 2026).