The move to deregulate the power industry has led to many lower electric bills, but the regulators are still working to maximize the benefits of the reforms. NJSpotlight reports that the New Jersey Board of Public Utilities has called on the regional power grid operator to change its policies regarding grid expansions.
NJSpotlight reported in 2010 that, after more than a decade of deregulation, at least two electricity providers had entered into residential electricity offering greater competition and lower prices. Yet despite the emerging market, average retail rates for residential customers in New Jersey have climbed more often than they have fallen over the past 12 years, according to the U.S. Energy Information Administration. The EIA reports that through June the state has suffered from the sixth-highest electricity rates in 2011.
The problem according to the BPU, however, is not the policy of electricity deregulation. With such high prices, competition should prove fierce. Instead, they argue that PJM Interconnection, which manages the grid throughout the state and much of the Mid-Atlantic, has allowed local transmission owners too much sway over adding transmission capacity. In areas where power generators also own transmission lines, the companies have strong incentive to avoid the costs of expansion, keeping artificially inflated electricity rates.
"The risk of manipulation in this situation is too high and too difficult to properly monitor and mitigate," the state told PJM in a letter, according to the news source.
The letter comes only weeks after a blistering op-ed column in the Daily Record called out the organization for pushing forward plans to construct a transmission line to New York. PJM responded in the Daily Record, noting that it is in fact a non-profit and approved the current transmission project based on high demand in New York City, but the subsequent letter from New Jersey could reflect poorly on the organization.
Other criticism has also focused on PJM, with some companies complaining that its overly long and difficult connection process discourages new developments. NJSpotlight reports that 80 percent of projects are canceled before construction.
"It's a great deterrent to the development of new generation," Dennis Sobieski, an executive with Hess, told NJSpotlight. "It's impossible to finance."
Advocates hope that a reformed process for developing transmission lines could lead to greater investments in generation capacity and ultimately lower electric bills.