What You’ll Learn
- Why New Jersey electricity rates increased 17-20 percent in 2025
- How the BGS auction and PJM capacity market drive your bill
- What the 2026 rate outlook looks like for PSE&G, JCP&L, and ACE customers
- What options exist to reduce or stabilize your electricity costs, including NJ’s strong solar incentive programs
Introduction
If you are a PSE&G customer in New Jersey, you do not need anyone to tell you that electricity has gotten significantly more expensive. Between the 2025 BGS auction results, PJM capacity cost increases, and distribution rate adjustments, NJ residential electricity rates surged to historic levels and they have stayed there.
The average all-in rate for PSE&G residential customers now sits at approximately 26 cents per kWh. That is not a supply-only figure or a generation charge in isolation. That is the total cost you pay for every kilowatt-hour delivered to your home: supply, distribution, transmission, riders, and all other charges combined.
This guide breaks down exactly what happened to NJ electricity rates, why the increases occurred, what the 2026 outlook looks like, and what options NJ homeowners have to take control of their electricity costs.
What NJ Electricity Customers Are Paying in 2026
As of early 2026, the average all-in residential electricity rate in the PSE&G service territory is approximately 26 cents per kWh. That includes the BGS supply rate, distribution charges, transmission, societal benefits charges, and all applicable riders and surcharges.
For a household using 750 to 1,000 kWh per month, total monthly electricity costs now range from roughly $195 to $260 or more. That represents a substantial increase from early 2025, when the same household was paying $165 to $215 before the BGS auction results took effect.
The story is similar across all four of New Jersey’s regulated electric utilities. JCP&L customers experienced the steepest increase at 20.20 percent. PSE&G customers saw a 17.24 percent increase. Atlantic City Electric customers were hit with 17.23 percent. And Rockland Electric customers faced an 18.18 percent increase.
These are not isolated spikes. They reflect structural changes in wholesale electricity markets that the NJBPU has described as resulting in “historically elevated” rate levels.
Why NJ Rates Surged: The BGS Auction and PJM
To understand why your electricity bill looks the way it does, two interconnected systems matter: the NJ Basic Generation Service auction and the PJM capacity market.
How the BGS Auction Works
New Jersey’s four regulated electric utilities do not generate electricity. They purchase it through an annual competitive auction called the Basic Generation Service (BGS) auction, administered by the NJBPU. The results of this auction set the default supply rate for all residential and small business customers who have not switched to a third-party supplier.
When the February 2025 BGS auction results were certified, they reflected the largest single-year supply cost increase in the program’s history. The primary driver was not a sudden change in New Jersey, it was a structural shift in the wholesale electricity market that serves the entire Mid-Atlantic region.
The PJM Capacity Market Explosion
New Jersey sits within the PJM Interconnection footprint, the regional grid operator that manages electricity supply across 13 states plus Washington, D.C. PJM runs annual capacity auctions where power generators bid to guarantee enough electricity will be available to meet peak demand.
In the 2024 capacity auction (covering the 2025-2026 delivery year), capacity prices surged from approximately $29 per megawatt-day to nearly $270 per megawatt-day, an increase of over 800 percent. This single factor was the primary driver of the rate increases NJ customers experienced.
What Caused the Price Spike
The capacity price explosion was driven by a convergence of forces that had been building for years: rapid growth in electricity demand from data centers across the PJM region; retirement of older coal and gas power plants without sufficient replacement generation; PJM’s backlogged interconnection queue delaying new power projects from connecting to the grid; and new reliability accreditation rules that reduced the effective capacity counted from existing resources.
The total excess capacity in the PJM system dropped from over 16,000 MW to just over 500 MW in a single auction cycle. The market priced that tightness accordingly, and NJ ratepayers absorbed the cost.
Breaking Down Your NJ Electricity Bill
Your electricity bill in New Jersey has multiple components, and understanding them matters because they are driven by different forces and subject to different regulatory processes.
Supply Charges (BGS Rate)
This is the cost of the electricity itself, the generation and transmission portion of your bill. For customers on default BGS service, this rate is set annually by the BGS auction. It is the single largest component of your bill and the portion most affected by PJM capacity costs.
The BGS rate is also the portion you have the ability to change: either by switching to a competitive electricity supplier through NJ’s energy choice program, or by generating your own electricity with solar.
Distribution Charges
These are the charges for delivering electricity to your home through your utility’s local infrastructure. Distribution rates are set by the NJBPU and cover maintenance, upgrades, storm hardening, and operating costs for the local grid. PSE&G, JCP&L, and ACE each have their own distribution rate schedules, which are adjusted periodically through rate case proceedings.
Other Charges
New Jersey bills also include transmission charges, societal benefits charges (which fund energy efficiency and renewable energy programs), and various riders and surcharges. These smaller line items add up and contribute to the gap between the headline BGS rate and the all-in cost of approximately 26 cents per kWh.
What Does 2026 Look Like?
The 2026 BGS auction results, certified in February 2026, offer a partial reprieve, but only partial. PSE&G customers may see a slight decrease of roughly $3 per month. JCP&L customers may see a modest increase of about $4 per month. Atlantic City Electric bills are projected to remain roughly flat.
Context matters here. These minor adjustments come on top of the massive 2025 increases. Rates are not returning to pre-2025 levels. The NJBPU has been clear that the underlying supply-demand dynamics in the PJM market have not fundamentally changed.
Further, the July 2025 PJM capacity auction for the 2026-2027 delivery year hit its price cap at $329.17 per megawatt-day. A bipartisan price collar mechanism prevented even higher costs, but the fact that prices are hitting caps signals continued tightness. Additional rate adjustments tied to these results will begin affecting NJ bills in June 2026.
The Political Response
Rising electricity costs have become one of the defining political issues in New Jersey. Governor Sherrill’s first executive order focused specifically on energy affordability, directing the NJBPU to use every available tool to mitigate costs for ratepayers.
On the federal level, a bipartisan coalition of nine governors, including New Jersey’s, called on PJM to improve transparency and expedite interconnection of new generation resources. PJM has acknowledged the supply-demand imbalance and agreed to price caps that saved consumers across the region billions of dollars.
These are positive developments, but they are structural reforms that take years to produce results. For NJ homeowners facing 26-cent electricity today, waiting for regulatory relief means absorbing continued elevated costs in the interim.
PECO Electricity Rates in 2026: What PA Homeowners Are Paying
What Options Do NJ Homeowners Have?
New Jersey’s deregulated electricity market gives you options beyond simply accepting the default BGS rate. Here are the paths available.
Shop for a Competitive Supplier
Through NJPowerSwitch.com, residential customers can compare offers from licensed competitive electricity suppliers. Fixed-rate plans allow you to lock in a supply rate for a set term, providing protection against future BGS rate increases.
The trade-off: supplier plans may include early termination fees, and a fixed rate that looks attractive today could become less competitive if wholesale prices happen to drop. You are also only changing the supply portion of your bill, distribution charges and other fees remain unchanged.
Reduce Consumption
Energy efficiency measures like LED lighting, smart thermostats, improved insulation, and high-efficiency HVAC systems, reduce the number of kilowatt-hours you consume. At 26 cents per kWh, every kilowatt-hour you eliminate saves real money. But efficiency addresses volume, not price per unit. Your rate keeps climbing regardless.
Generate Your Own Electricity with Solar
Solar panels allow homeowners to produce their own electricity, reducing or eliminating their dependence on BGS supply charges. Unlike switching suppliers or reducing consumption, solar fundamentally changes the equation: instead of paying a rate that fluctuates with PJM auctions, BGS results, and political dynamics, you generate power at a fixed cost determined by the price of your system. That cost does not change for the life of the system.
At 26 cents per kWh, the value of every kilowatt-hour your solar system produces is among the highest in the country. The spread between what you pay the grid and what solar costs to produce is wider in New Jersey than in most other states and it gets wider with every rate increase.
Combined with New Jersey’s strong solar incentive programs, the financial case for solar in the PSE&G, JCP&L, and ACE service territories has become more compelling with each rate adjustment.
Why NJ’s Solar Incentive Stack Matters More Than Ever
New Jersey has one of the strongest state-level solar incentive programs in the country, and these programs remain fully available in 2026. At 26 cents per kWh, they compound on an already-strong avoided-cost foundation.
SREC-II through the ADI Program: For every 1,000 kWh (1 MWh) your solar system produces, you earn one SREC-II valued at $85. These payments are guaranteed for 15 years from your system’s interconnection date. This is not a variable market like Pennsylvania’s SREC program: it is a fixed, predictable income stream that layers on top of your electricity savings.
Full Retail Rate Net Metering: New Jersey requires all investor-owned utilities to credit excess solar energy at the full retail rate. When your system produces more than you use, those credits offset future bills, effectively making the grid your battery. At 26 cents per kWh, every excess kilowatt-hour credited to your account is worth more than it was a year ago.
Property Tax Exemption: The added home value from your solar installation is exempt from property tax in New Jersey. You get the value increase without the tax increase.
Sales Tax Exemption: Solar energy systems are exempt from New Jersey’s 6.625 percent sales tax, reducing your upfront cost on a purchased system.
While the federal residential tax credit (Section 25D) expired at the end of 2025 for homeowner-owned systems, homeowners who choose a solar lease or PPA can still benefit from the commercial tax credit (Section 48E), which the system owner passes through in the form of lower monthly payments.
NJ SREC-II and ADI Program: How NJ Solar Owners Get Paid (/nj-srec-adi-program/)
Are NJ Rates Going to Keep Rising?
The structural factors driving rate increases like data center demand growth, power plant retirements, PJM interconnection delays, and infrastructure aging, are not short-term disruptions. PJM has acknowledged that demand growth is outpacing supply additions, and the most recent capacity auction hitting its price cap confirms that the market remains tight.
The NJBPU is actively working on long-term solutions, including offshore wind development, grid modernization, and efforts to accelerate new generation interconnection. But these are multi-year projects. For NJ homeowners, the practical implication is the same as it is across the PJM region: planning around continued elevated rates is more prudent than hoping for near-term relief.
How Sunwise Can Help
Sunwise Energy serves homeowners across New Jersey with solar installations designed around real electricity usage, current utility rates, and state incentive programs. Our team understands the specifics of PSE&G, JCP&L, and ACE rate structures and can show you exactly what solar would look like for your home.
If your electricity bill has become a source of frustration, we can provide a clear, no-pressure analysis of your options.
NJ Electricity Rate FAQs
How much did NJ electricity rates go up?
New Jersey residential electricity rates increased between 17 and 20 percent in 2025, depending on the utility. PSE&G customers saw a 17.24 percent increase, JCP&L customers 20.20 percent, Atlantic City Electric 17.23 percent, and Rockland Electric 18.18 percent. The all-in rate for PSE&G residential customers now averages approximately 26 cents per kWh.
What is the NJ BGS auction?
The Basic Generation Service auction is New Jersey’s annual process for setting the default electricity supply rate for customers who do not purchase from a third-party supplier. All four of New Jersey’s regulated utilities — PSE&G, JCP&L, Atlantic City Electric, and Rockland Electric — procure electricity through this auction, and the resulting costs are passed directly to customers.
Will NJ electricity rates go down in 2026?
The 2026 BGS auction results suggest minor adjustments — a slight decrease for PSE&G customers and a modest increase for JCP&L. However, rates remain at historically elevated levels and are not returning to pre-2025 pricing. Additional PJM capacity costs will begin affecting NJ bills in June 2026.
Can I switch electricity suppliers in New Jersey?
Yes. New Jersey’s energy choice program allows residential customers to choose a competitive electricity supplier through NJPowerSwitch.com. You can compare fixed-rate and variable-rate offers from licensed suppliers. Distribution charges remain with your local utility regardless of which supplier you choose.
Will solar panels eliminate my PSE&G bill entirely?
A properly sized solar system can offset most or all of the supply charges on your PSE&G bill. You will typically still see a small monthly service fee for grid connection. Combined with New Jersey’s SREC-II program, which pays $85 per MWh for 15 years, solar in NJ provides both bill reduction and additional income.
