Most New Jersey residents will pay more on their electricity bills starting this summer. Here’s what’s driving the increase

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Most New Jersey residents will spend more on electricity starting June 1. The state’s annual electricity auction for basic generation service, or BGS, is driving the uptick. According to the New Jersey Board of Public Utilities, electric bills for most residents and small to medium-sized businesses served by the four electric distribution companies will increase on an average by at least $20.

Why is there an auction?

Per state law, electric companies are required to buy at market rate the energy they need to serve customers, who do not switch to a third-party supplier.

The companies submit proposals on how they will buy electricity through the auction. Unlike the online marketplace eBay, the prices at the auction start high and decrease with each bid until suppliers are no longer willing to offer a lower bid at which they can provide adequate service.

The cost decided at auction is sent directly to ratepayers.

Who is PJM Interconnection and how much of a factor are they?

PJM Interconnection is a regional transmission organization, or RTO, that coordinates the movement of electricity in 13 states and the District of Columbia. They are also charged with maintaining the electrical grid.

The grid operator held a capacity auction last July that saw record totals, which BPU President Christine Guhl-Sadovy said was the main driver behind the auction results.

“[The] results are the culmination of several issues: rapidly increasing demand for electricity, coupled with limited supply growth due to lagging new generation interconnection, and flawed market dynamics in the PJM region,” she said.

Your bill will go up June 1.

Atlantic City Electric customers, who are already paying the highest electricity rates among New Jersey residents, will see their bills increase from $162.60 to $190.62, a 17.23% increase. Last year, ACE raised rates by 20%, according to the Press of Atlantic City. The company has requested an additional 8% increase in rates after making infrastructure improvements.

Jersey Central Power and Light customers will have among the lowest average bills in the state, though they have the highest percentage increase at 20.2%. JCP&L customers will see their bills climb from $112.25 to $134.92.

The increase for PSE&G customers will be similar to Atlantic City Electric customers. Their bills are increasing from $155.84 to $182.71.

Can you still save money on your bill?

It is possible to keep your monthly electric bills low in spite of dramatic increases in rates.

Among the many ways to save is to turn down your thermostat, commission an energy audit of your home. Other tips include taking a shorter shower or switching to LED lighting. You can also learn how to better operate your appliances to conserve energy.