New Jersey Electricity Market Structure
On August 1, 2003, the NJ Board of Public Utilities removed electricity rate caps that had been established by New Jersey’s electric utilities resulting in a state wide deregulated electricity market.   If taken advantage of properly, business consumers can save on their electricity spending.
The largest non-residential electricity customers in New Jersey who have decided to stay on utility service are on default electricity rates that vary with regional power pool hourly prices. These large electricity customers, 1,200 kW peak usage and above, are known as “Commercial and Industrial Energy Pricing” (CIEP) customers and are exposed to these variable, market-based rates. All non-residential customers remaining on utility service with usage less than 1,200 kW are on fixed default rates that are established by an auction conducted by the NJ Board of Public Utilities.
Default rates for 2009 are based on auctions that were facilitated in 2006, 2007, and 2008. Electricity prices were much higher during these years on the wholesale market then what they are in 2009. This has caused a surge in competitive retail electric providers who are now able to offer business customers a rate on their electricity that is 10-25% less than what they are paying with the utility default rate.
