Lavallette Electric Rates to Rise in 2025 As Capacity Costs Balloon 230 Percent

Utility Pole (Credit: Maëlick/Flickr)

Electricity rates under Lavallette’s municipal power utility will be rising in 2025, part of a trajectory set by the state’s environmental policies, according to the borough council’s liaison to the New Jersey Public Power Authority. But prices to keep the lights on will remain lower than those paid by customers of commercial utilities such as JCP&L.

Lavallette electrical utility customers will see a rate increase of 3.5 cents per kilowatt hour this year, and the council is expected to introduce a “capacity adjustment charge” to address skyrocketing energy costs that are up more than 230 percent this year due to state-level requirements that mandate the use renewable energy sources such as solar and wind. In 2024, the borough’s capacity budget was $196,000, but for 2025 it will rise to $646,000.

Lavallette obtains its energy through the PJM Interconnect, a grid clearinghouse whose acronym stems from “Pennsylvania-Jersey-Maryland,” and incorporates some other neighboring areas. PJM is a regional transmission provider colloquially known as “the grid,” and is part of the nation’s overall eastern grid. Both public and private utilities source its energy from PJM, and are subject to state-level policies. Lavallette Councilman James Borowski has long represented the borough before the state’s Public Power Authority, which obtains its energy from PJM. Each year, there is a capacity auction wherein utilities buy energy capacity. The system-wide pricing was up significantly this year.

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“System-wide, over the entire footprint, it was about $2.6 billion last year and it’s going up to about $14 billion this year,” Borowski said, of the capacity costs. “People are saying it’s going to get so much worse, because there is no generation in queue.”

Lavallette residents will not be affected to the extent that ratepayers of commercial utilities will, he added.

“It’s going to affect every New Jersey ratepayer, because there is no way the investor-owned utilities are going to absorb that,” he said.

According to Borowski, the Murphy administration’s climate change policies have forced the closure of coal-fired power plants and are increasingly going after natural gas generation capacity. Likewise, environmental activists have opposed efforts to convert the coal-fired plants to natural gas, instead seeking to ultimately shutter all fossil fuel plants in favor of solar and wind power. That power, however, comes at a significantly higher cost. The abundance of natural gas available in the New Jersey market cannot be tapped due to the state’s regulations.

“They’ve mothballed many of the coal-fired generators, and to a degree I can understand that, but we have the ability to use natural gas and it burns very cleanly,” Borowski said. “It could really help keep the price down, but now in New Jersey they’re not letting people go that route. You have to do the renewables – it isn’t a choice.”

The capacity auction is held each year in July, meaning customers often do not feel the bite of increased energy prices until the following year when contracts are renewed and rates are set. Regardless of where it originates, Borowski said the system needs to have a larger pool of energy sources to draw from in order for rates to stabilize.

“It’s a clear market signal for the powers that be to start building some generation capacity,” he said.