New Jersey Commercial Electricity 2026: Navigating the PSE&G Rate Cliff
Commercial businesses operating in northern and central New Jersey (the PSE&G service territory) face a severe "rate cliff" entering the summer of 2026. The crisis is twofold: On the regulated delivery side, PSE&G continues to pass through approved base-rate increases and massive BPU-mandated infrastructure riders (Energy Strong, Clean Energy Future). Simultaneously on the deregulated supply side, the PJM Interconnection's recent capacity auction cleared at historically devastating levels. Beginning in June 2026, capacity charges for New Jersey businesses will skyrocket, acting as an unavoidable tax on any business that operates during peak summer hours.
Executive Impact
- →The June 2026 Capacity Shock: PJM capacity prices inside the EMAAC zone (which includes PSE&G) cleared massively higher than previous years. If your business signs a standard fixed-rate contract attempting to cross over the June 2026 boundary, the supplier will embed this massive capacity spike directly into your overall $/kWh rate.
- →PSE&G Delivery Creep: Regulated T&D (Transmission and Distribution) charges now often eclipse the actual cost of the electrical commodity itself, diluting the perceived value of shopping for competitive third-party electricity generation.
- →RPS Compliance Costs: New Jersey maintains some of the most aggressive Renewable Portfolio Standards (RPS) and Solar Renewable Energy Certificate (SREC) mandates in the nation, costs which are forcibly baked into every retail electricity contract signed in the state.
Strategic Mitigation for NJ Businesses
The era of simply signing a 36-month fixed contract and filing it in a drawer is over for New Jersey commercial properties.
- Targeted Capacity Management (PLC): Your capacity tag (Peak Load Contribution) is determined by your facility\'s usage during PJM\'s 5 highest coincident peak hours of the previous summer. By utilizing alert software to shed non-essential load (e.g., pre-cooling buildings and raising thermostat setpoints) during these 5 hours, Newark and Jersey City property managers can artificially suppress their capacity bill for the entire following year.
- Passthrough Contracting: Because suppliers are baking massive risk premiums into fixed capacity rates to protect themselves, medium and large users should execute "Energy-Only" or "Block and Index" agreements. You lock in the wholesale energy commodity but pass the capacity and transmission charges through at raw, un-marked-up cost.
The Impact of Datacenter Load
PJM's capacity prices are not spiking simply because of coal retirements; the massive influx of hyper-scale datacenters in neighboring states and northern New Jersey is pulling immense baseload power from the grid. This fundamentally alters the localized grid architecture, meaning Newark will likely remain a premium pricing zone within the broader PJM footprint for the remainder of the decade.