In N.J. Governor’s Race, Energy Costs Have Become a Central Issue

Most politicians rarely discuss electricity costs. But in New Jersey, they have been featured prominently in campaign ads and stump speeches in the run-up to November’s election for governor.

This generally obscure topic has become critical in New Jersey because electricity rates this summer climbed 22 percent from a year earlier — faster than all but one state: Maine.

As the governor’s race has tightened and affordability has become a key issue, power costs have become a predominant theme in ads paid for in part by groups associated with both national parties.

What happens in New Jersey is likely to be an early read of the national political mood in 2026, when a majority of governors’ mansions will be up for grabs as well as congressional and state legislative seats. That’s because electricity rates are rising sharply in many states — the national average residential rate was up 5 percent in July from the same month last year, and energy experts say rates are likely to keep climbing quickly for the foreseeable future.

The rising cost of living has been a pressing concern for many Americans over the past couple of years, remaining so this year in large part because of President Trump’s decision to sharply raise tariffs on imported goods.

“Electricity is the new eggs,” said David Springe, executive director of the National Association of State Utility Consumer Advocates, referring to the anger over inflation that helped Mr. Trump win last year’s election.

But the causes of escalating energy costs are complex and hard for any elected official to capitalize on. That hasn’t stopped New Jersey’s Democratic and Republican candidates for governor — Representative Mikie Sherrill and Jack Ciattarelli — from trying.

“I’ll massively expand cheaper, cleaner power generation,” Ms. Sherrill said as she announced a plan to use a state of emergency declaration to freeze electricity costs for at least a year.

Mr. Ciattarelli, who is running for governor for the third time, has sought to blame the rising costs on Democrats like Ms. Sherrill. Democrats have controlled the governor’s office in New Jersey for eight years and the State Legislature for 23.

Seven years ago, during Gov. Philip D. Murphy’s first term as governor, New Jersey’s large natural gas and nuclear power plants made it a net exporter of electricity. But higher energy demand and the closing of several power plants in recent years have made the state a net importer of electricity, according to an analysis by the Energy Information Administration.

“We’re having to import our electricity and paying through the nose to do it,” Mr. Ciattarelli said at a recent news conference.

But importing electricity is not necessarily responsible for New Jersey’s rising electricity rates. Other states like West Virginia can generate more energy than they use but have also experienced big price increases.

Most governors can do little to bring down electricity prices quickly. Rates are made up of many costs, only some of which retail electric utilities and state officials have control over. The cost of electricity is typically proposed by utility companies or government-run power agencies and approved by state and city regulators. While those regulators are typically appointed by governors or mayors, they often cannot deny rate increase requests or force utilities to charge lower prices.

“Let’s be clear: The cost of electricity is not set by the governor in any state,” said Mark Cooper, a senior fellow for economic analysis at the Institute for Energy and the Environment at Vermont Law and Graduate School. “Everyone will say, ‘We will lower the prices,’ but the question is how? The answer is it’s a long process.”

New Jersey and a dozen other states are part of the nation’s largest regional electric grid, which is managed by PJM Interconnection, a nonprofit organization. PJM manages the electric grid for 67 million people from Virginia Beach to Chicago, and it effectively sets a significant portion of retail electricity rates over which governors and their appointed regulators have little sway.

PJM’s members include utility companies, owners of power plants and power lines, energy traders, and others in the energy industry.

One big reason electricity prices are climbing in New Jersey and other PJM states is an annual auction in which power plant owners submit prices they are willing to accept for supplying electricity at times of peak demand, which typically happens in the summer. The prices set by that auction have climbed sharply in recent years, leading to higher retail energy rates.

At least three-quarters of the 22 percent increase in New Jersey’s average electricity rate can be attributed to the PJM auction.

New Jersey isn’t alone in feeling that pain.

Several governors have grown increasingly critical of PJM. They say that the grid manager has made it too hard for new wind and solar projects to connect to and deliver cheaper electricity to the grid.

In December, Gov. Josh Shapiro of Pennsylvania, a Democrat, sued PJM over its annual auction in July. Mr. Shapiro and PJM reached a settlement that capped the price set by the auction, a deal that Mr. Shapiro said would save Pennsylvanians an estimated $21 billion over two years.

A spokesman for PJM said it was reforming its markets and the process for adding new energy sources and resolving imbalances between electricity supply and demand.

“Electricity prices are rising, not only in New Jersey but across PJM and throughout the rest of the United States, because demand is outpacing supply,” the spokesman, Dan Lockwood, said in a statement. “PJM understands the challenges that higher energy prices pose to the people and businesses of any state or jurisdiction we serve, and we are working with our stakeholders on multiple fronts to alleviate this supply/demand imbalance.”

The issues with PJM are just one reason for electricity price increases. The cost for long-overdue improvements to power systems and upgrades needed to support energy-hungry data centers are also driving up household electric bills.

New Jersey and several other East Coast states are also on the receiving end of Mr. Trump’s attacks on offshore wind projects. Last month, he instructed a half-dozen federal agencies to draft plans to derail efforts to install hundreds of wind turbines in waters stretching from Maine to North Carolina.

Governors of New Jersey, New York, Massachusetts, Connecticut and Rhode Island signed a letter urging the Trump administration to remove barriers to offshore wind projects already under development and construction.

Ms. Sherrill supports offshore wind, but Mr. Ciattarelli is aligned with Mr. Trump’s position.

The fight over offshore wind could further raise electricity bills, energy experts said.

After more than a decade of little growth in demand for electricity, the East desperately needs more energy because of the building boom in data centers — about 60 gigawatts or the equivalent of almost the entire electricity demand in California, said Gregory Poulos, executive director of the Consumer Advocates of PJM States, an organization of state officials who represent electricity customers.

“I’m very worried that we’re looking at superhigh costs and blackouts in the region,” Mr. Poulos said.

Public Service Enterprise Group, the utility company that serves about 70 percent of New Jersey’s electricity users, said it offered customers payment relief and energy efficiency programs. But the power company said it did not control more than half of the amount customers paid for electricity service, including results of the PJM’s grid capacity auction.

“We’re working hard to keep bills as low as possible on the portion of the bill that we manage and control,” said Dave Johnson, chief customer experience officer at the utility company.

Ashley Koning is the director of the Eagleton Center for Public Interest Polling at Rutgers University, which has conducted polls on the governor’s race. She said voters were hyper-aware of affordability and utility costs were among their most tangible concerns.

“That increase that you’re seeing,” she said about monthly utility bills, “is probably more affecting and more damaging to you than seeing your tax bill go up.”