As energy costs are predicted to dramatically increase and budget season is upon associations with fiscal years based on the calendar year, New Jersey associations that purchase electric service for their residents should prepare for surging utility rates in 2025 and 2026 following PJM Interconnection’s (“PJM”) last capacity auction. PJM, headquartered in Valley Forge, Pennsylvania, is the United States’ largest competitive wholesale electricity market, serving 65 million people across the District of Columbia and parts of 13 states, including New Jersey. Its 2025 to 2026 capacity auction (where power generators bid to provide electricity capacity) resulted in soaring prices over 800% higher than last year due to market rule changes, declining electricity supply, and increased demand.
Ultimately, these auction results are anticipated to raise utility rates and drive-up electric bills for organizations in New Jersey, including community associations that pay for electricity on behalf of the residents in mostly mid- and high-rise buildings.
Before the expected increase, your community association may be able to enjoy a substantially lower utility rate than will be available in PJM’s capacity market by locking in bulk electricity rates in 2024 for a fixed time period extending into 2025 and beyond.
If you believe your community association may be impacted, you can begin planning for the higher utility rates now by:
- Consulting with electricity producers to lock in your association’s bulk electricity rates for a particular period of time,
- Confirming whether your association is eligible for energy rebates, incentives and other promotions through your utility company, the New Jersey Department of Environmental Protection, or other programs and initiatives, and
- Participating in programs or engaging energy consultants to help determine how your association can improve energy efficiency and reduce energy consumption, which in turn, can save your association energy costs.
Should you have any questions regarding whether your association may be impacted by increased utility rates and how, you should consult with your association’s energy provider. Becker community association attorneys will assist with reviewing any contracts with energy generators with whom you may wish to contract.