Deregulation hasn’t led to lower costs in New Jersey
New Jersey deregulated its electricity market in 1999. Today, high electricity costs are a major concern in New Jersey – despite the rosy promises of deregulation’s supporters:
If you ask businesses, one of the biggest drags on the state’s economy is higher energy costs. If you question consumer advocates, it is one of the biggest complaints they hear from utility ratepayers. If you listen to the Christie administration, lowering electricity bills is one of its top priorities.
Why then, is it such a seemingly intractable problem?
In the past, so-called vertically integrated utilities delivered power to homes and businesses. They owned the power plants, the transmission wires, and the distribution lines that delivered electricity to customers. The New Jersey Board of Public Utilities determined the prices paid by consumers, including the cost of generating the electricity and the expense of moving it along the power grid.
That all changed in 1999 when the state broke up the gas and electric monopolies. Now, what was traditionally the biggest part of your electric bill — the cost of generating the power — is unregulated and set by the marketplace, sometimes to the benefit of consumers, such as when natural gas prices drop, and oftentimes not to their advantage.