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S 4693

Relates to taxpayer publicly funded research

2025 Regular Session Introduced by Cordell Cleare

NJ BPU must study moving away from PJM's capacity market toward bilateral contracts or a multi-state/alternative grid, with a report by Dec 31, 2025.

REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
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Bill Summary · S 4693

Summary of Senate Bill S 4693

Overview

S 4693 would require the New Jersey Board of Public Utilities (BPU) to collaborate with neighboring states to review and recommend collective actions to address perceived flaws in PJM Interconnection’s capacity market and interconnection processes. The bill contemplates three potential strategies: (1) tightening bilateral contracting requirements for load-serving entities, (2) withdrawing from PJM’s reliability pricing model (RPM) and pursuing a multi-state compact or alternative capacity mechanism, or (3) withdrawing from the PJM-controlled regional grid and establishing or joining a different transmission grid. The Board must report its findings and recommendations by December 31, 2025. The act takes effect immediately, with anticipatory administrative action allowed.

Legislative status and actions

  • Introduced: June 30, 2025
  • Status: Referred to Investigations and Government Operations (Senate) and, on introduction day, listed as referred to the Senate Economic Growth Committee
  • Sponsor: Cordell Cleare (primary)
  • Related bills: Companion A 5902; companions A 3438; S 6562 (prior-session)
  • Purpose of referral: To evaluate alternatives to the PJM capacity market and guide potential policy changes

Context and rationale

  • PJM administers a regional capacity market that funds future electricity capacity through auctions. Stakeholders (including the Organization of PJM States, Inc. and the Independent Market Monitor) have raised concerns about the interconnection backlog and market design flaws that may misprice capacity.
  • In July 2024, PJM’s 2025/2026 delivery-year auction produced substantially higher clearing prices, costing consumers billions more than the prior year, and raising concerns about affordability and policy alignment with state energy objectives.
  • The bill asserts that PJM’s actions have increased costs for ratepayers and that PJM has not adequately addressed these concerns or been responsive to New Jersey energy policies.

Key provisions

  • Section 3a (Board action and collaborative research)
    • The Board must collaborate with neighboring states to research and recommend collective actions to: 1) Require any electric load-serving entity (LSE) in New Jersey to demonstrate to the Board that it has contracted for at least 80% of its capacity needs on a bilateral basis for at least five years into the future; 2) Withdraw from PJM’s RPM and develop a multi-state compact to secure electric capacity through contracts, private-sector participation, and/or competitive capacity auctions (the “fixed resource requirement” approach) or a similar mechanism; 3) Withdraw from PJM’s regional high-voltage grid and:
      • Establish an independent electric transmission grid, or
      • Join an existing electric transmission grid operating in another state or region.
  • Section 3b (Reporting deadline)
    • By December 31, 2025, the Board must submit a report to the Governor and the Legislature detailing findings and recommendations under subsection a.
  • Section 2 (Definitions)
    • Clarifies the terms “Board” (NJ Board of Public Utilities), “PJM” (as defined in state law), and “Reliability Pricing Model” (RPM).
  • Section 4 (Effective date)
    • The act takes effect immediately, and the Board may take anticipatory actions necessary for implementation.

Who is affected

  • Electric load-serving entities in New Jersey (e.g., investor-owned utilities, municipal utilities, cooperatives)
  • New Jersey Board of Public Utilities (responsible for coordination and recommendations)
  • PJM Interconnection and related market participants
  • Ratepayers in New Jersey, who could see changes in electricity costs depending on future policy direction

Timeline and procedural notes

  • Introduced June 30, 2025; referred to Investigations and Government Operations (and previously listed in related committee references)
  • A comprehensive Board report to the Governor and Legislature is due by December 31, 2025
  • Immediate effect, with authority to begin anticipatory administrative actions to implement the act’s objectives

Practical considerations

  • The bill signals a potential shift away from PJM’s capacity market toward bilateral contracting or multi-state/independent-grid arrangements, subject to legislative and gubernatorial approval.
  • Outcomes depend on intergovernmental cooperation, interstate compacts, and the technical and regulatory feasibility of alternative grid structures.

Compiled from official sources — confirm details with the bill’s official record.

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