RPA on New Jersey’s Electricity Rate Emergency

Kyle Mason (Associate Planner) and Robert Freudenberg (VP, Energy
& Environment Program) from the Regional Plan Association break
down why New Jersey electricity rates spiked 17-20% in June 2024.
They explore how outdated grid infrastructure, AI-driven energy
demand, and stalled renewable projects are creating a perfect storm
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show? Email us! Welcome to Uptime Spotlight, shining Light on
Wind. Energy's brightest innovators. This is the progress Powering
tomorrow. Allen Hall: Kyle and Rob, welcome to the podcast.
Thank you for having us.  Robert Freudenberg: Yeah,
thanks. Great to be here.  Allen Hall: Uh, so I was doing
a lot of homework online a couple of days ago and looking into, uh,
some statements with an administration about the electricity rates
in New Jersey, and I thought, well, I need, I need to do my
homework because some of this is new to me and throughout all my
research and spent several hours on it. Your organization is the
only one that had any real data. So I'm glad you're joining us
today. So, Kyle, I would like to start with you first, and, and.
There's a fundamental challenge that's happening, uh, in New
Jersey. Can you just paint a picture of what around New Jersey rate
payers are facing with their electricity bills? Kyle
Mason: Yeah, absolutely. So starting [00:01:00] June
of this year, uh, electricity rates in New Jersey went up between
17 to 20%, depending on your utility company. Uh, that is a cause
of a larger problem with the regional grid operator. PJM. Uh, PJM
is the grid operator for New Jersey and 12 other states. It covers
over 60 million people in a wide geographic area. Uh, they run a
annual capacity auction, which secures power for when the grid is
at peak load or when most power is being used on the grid. And that
capacity market saw record high prices, which trickled down to.
Increased electricity rates for New Jersey rate payers.  Allen
Hall: Rob, from a policy perspective, how did we get here?
Robert Freudenberg: Yeah, I mean, there are, there are so many
ways we got here and that's part of the issue. Um, you know, I
think what we've seen in, in the aftermath [00:02:00] of
these rate hikes is everybody trying to point to one thing. Uh, and
there is no one thing here. This is, this is a series of changes
over time. Um, you know, we're. We're, we're looking at, um, the
way we bring energy onto a system on an old grid. We have a very
old grid. And we're trying to update it in real time. And the
process to put things on the grid is, uh, taking a lot longer than
it used to. And we're putting new and more, uh, various types of,
of energy sources onto the grid. So, um, as we're, it's like trying
to, to build the plane while you're flying it, and we're trying to
update our grid. As we need the energy and as demand is increasing.
So, um, you know, as we add these new and various sources, uh, to
the grid, they're going through a process that used to take a few
years, and now it takes many years. And we're also in a, in a phase
where we're adding a lot of renewables, which are, you know, not
big behemoth like power plants. Um, you know,
they're [00:03:00] smaller, more distributed. So the
process that's set up to bring new energy, new infrastructure
online is outdated. And, um, you know, I think what we're, what
we're finding is as we go and more energy is demanded that the
system is not keeping up, uh, with the demand. And so we're falling
behind and projects are getting stuck in the queue. And the, the
federal government, which is overseeing this, is trying to update
it, um, and trying to make changes, but the grid operators are
trying to react to that and, and find the realistic balance. So at
the end of the day, you have, uh, new systems that want to come
online with an old system that's not letting them come online as,
as quickly as they need to. Joel Saxum: And, and there's a
compounding factor here too, right? Rob and Kyle, correct me if I'm
wrong, but we have new types of generation on an old grid. But then
we also have new types of demand on that grid, right? So with, you
know, the buzzword around energy, of course,
AI, [00:04:00] data centers, all these things. But we're
really looking at a change. And Kyle, when we talked a bit kind of
offline and planning this, and you, you noted to, to us that. This,
this 1% of like annual load growth now is looking at like 5% in the
future, and we haven't had that kind of growth since. Was the air
conditioning was invented? Is that what you said?  Kyle
Mason: Yeah, absolutely. We are seeing in our lifetimes
unprecedented load growth. I mean, we have not seen the amount of
year over year percentage low growth since. Air conditionings were
invented and they started going up in places like New York City and
Detroit and Chicago and other big cities throughout the us. And
what we're seeing right now is a massive, massive expansion of data
centers. Not just small data centers that we saw expand during the,
uh, years leading up to the.com bubble, but rather these massive,
uh, hundred plus megawatt data [00:05:00] centers that
are. Very, uh, tightly geographically located. So there's clusters
of these in Northern Virginia, in New Jersey and Pennsylvania and
Ohio, and they're using massive amounts of electricity and they
largely were not, uh, predicting 10 years ago they were not
predicting AI to, uh, develop as it has and for data centers to
expand as they have. So it's really been a. Tricky, tricky planning
situation with grid operators, the federal government and state
governments.  Joel Saxum: Yeah, I think that's something
that the general public doesn't really see or understand right now
is like when you're playing around on CH GPT making a, a funny
picture of your friend picking up a house or whatever the thing is,
you know, the amount of energy that, that those resources are
taking up. Is massive and the growth is there. The things are
happening behind the scenes. You don't see the issue now as a rate
payer, as a normal citizen because the lights are still on in your
house. Everything's cruising lock you. You
see [00:06:00] this little blurb, like you said last
June, like in June, like, oh, my electricity price just went up.
Well, that's gonna continue to keep happening here. And then you
have this, this, this perfect storm of. Now we're, we have an
interconnection queue issue within PJM, and then you have like the
1100 megawatt ocean winds project offshore wind that would've been
connected in New Jersey there that is, has been abandoned for now.
At least. There's, there's a lot of things happening. Chess pieces
moving on the board. They're going the wrong way. We don't wanna
see.  Robert Freudenberg: Yeah. And here's the real
challenge, and this is where policy comes back, is, you know, up
until, uh, the last year or couple years, um, we were all rowing
towards the same direction that we're gonna electrify things, we're
gonna electrify our cars, we're gonna electrify our buildings,
we're gonna be more plugged in, uh, use more data. And we're gonna
create new renewable energy to feed that hunger, uh, for power.
And, and what has just been completely upended is,
is [00:07:00] this idea that, okay, we can have more, we
can do more, and we'll have clean energy, uh, to kind of feed that.
We'll get these projects in the queue, we'll get 'em lined up, and
we've been spending the better part of the last decade or so.
Planning for new big renewable energy projects to feed that demand,
um, and, and feed our electric cars and feed our more electrified
buildings. And now all of a sudden the plug has been pulled on
that, and we're still moving towards the direction of having
electric cars and having electric buildings and having data
centers. But now without the renewable energy, that was really just
on the verge of coming online. And, and that's the, the kind of
conundrum we're in right now is that we are, we are hungry for
more. We have set things on track to kind of move towards a more
electrified, more plugged in world. And now we're unplugging the,
the renewable energy sources. I could have said that.  Allen
Hall: And New Jersey's really at risk because it's its own
energy island, so to speak. It uses more
energy [00:08:00] than they produce. But they're also
tied to all this data center. So the larger PJM, uh, grid, I'll
call it, is what? Pennsylvania, Virginia, New Jersey, and a number
other big power hungry states. They're all interconnected. New
Jersey was trying to help forge a path to bring more energy online,
but obviously that has stopped from what we have seen. There was
supposed to be about around five gigawatts of offshore wind. To be
able to supply New Jersey and that has all stopped. But at the same
time, uh, Kyle, I think you mentioned there's over 200 gigawatts of
interconnect queue. That is vast majority is renewable, just
waiting to be connected.  Kyle Mason: Yeah. Yeah. As of
about. April of last year, there were over 200 gigawatts of
projects in the internet connection queue waiting to be studied.
And around 98% of them were solar, wind, both onshore and offshore,
and [00:09:00] storage. Now a project being in the queue
and completing the study doesn't necessarily mean that it's going
to come online, but even if 50% of those projects came online, uh,
it would've. Uh, markedly improved the rate situation, and those
are clean energy, uh, systems that can be deployed in small,