NJ Had the Biggest Electricity Rate Hike of Any State in 2025 — Here's What You Can Do About It

I've had the same conversation dozens of times over the past several months. A homeowner opens their PSE&G or JCP&L bill, does a double-take, and calls me. Not because they were already thinking about solar — but because the number on that bill was so jarring that it finally pushed them to do something.

I get it. Last year was a gut punch for New Jersey ratepayers, and the data confirms what every family in this state already felt in their wallet.

A report released by the Congressional Joint Economic Committee found that New Jersey had the largest electricity rate increase of any state in the country in 2025 — a 16.9% spike that added $260 to the average household's annual bill. The national average increase was 6.4%. New Jersey's was more than two and a half times that. Of all 50 states, only Washington D.C. saw a larger hike, at 23.5%.

Even more striking: according to U.S. Rep. Josh Gottheimer, energy costs in New Jersey have risen 45% over just two years. Not 45% over a decade. Two years.

My name is CJ Smith. I own Solar 4 Heroes, and I've been helping New Jersey homeowners go solar for years. I'm not here to scare you — the numbers do that on their own. I'm here to explain exactly what happened, why it's not going away on its own, and what you can actually do about it.

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What Actually Happened: The PJM Auction That Shook Every Bill in the State

To understand why your bill went up so sharply, you need to know about a single auction that most New Jerseyans have never heard of.

New Jersey's electricity is managed by a regional grid operator called PJM Interconnection — named for Pennsylvania, "Jersey," and Maryland, the original member states. PJM runs the electric grid for 13 states and Washington D.C., and it holds an annual capacity auction where utility companies buy future electricity supply in advance to cover peak demand periods — the hottest summer days, the coldest winter nights.

In July 2024, PJM ran its capacity auction for the 2025–2026 delivery year. The results were staggering. The marginal price for electricity capacity shot from around $29 per megawatt-day in the prior auction to nearly $270 per megawatt-day — an increase of over 800% in a single auction cycle. The total cost to supply the grid jumped from $2.2 billion to $14.7 billion in one year.

Utilities are required by law to pass these costs directly to customers. They don't profit from the auction results — they simply collect from ratepayers what the capacity market costs them. So that 800% increase in wholesale electricity capacity prices became a 17–20% increase in your monthly bill, effective June 1, 2025.

The root cause was a basic supply-and-demand crisis. Demand for electricity is surging — driven primarily by the explosive growth of data centers, which according to PJM now account for 70% of projected new demand growth. At the same time, supply has tightened. Power plant retirements have outpaced new generation coming online, and PJM's own interconnection queue — the process by which new solar and wind projects get approved to connect to the grid — has become a massive bottleneck. As of early 2025, 143 gigawatts of projects were waiting in that queue, including 79 projects in New Jersey alone, enough to power approximately 115 million homes.

More demand. Less supply. Higher prices. Every New Jersey ratepayer paid for it.

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By the Numbers: How New Jersey Compares to the Rest of the Country

The Congressional JEC report makes the comparison stark:

New Jersey's 16.9% increase was the highest of any of the 50 states — and it came after a period when NJ rates had already been climbing fast. From 2019 to 2022, New Jersey's electricity rates actually held relatively flat or decreased slightly. Then, starting in 2023, annual rate increases jumped to over 9% per year. The 2025 spike wasn't a one-time anomaly on top of stable rates. It was a sharp acceleration of a trend that was already running hot.

The average New Jersey household now pays approximately $1,800 per year for electricity. That's before factoring in summer cooling loads, electric vehicle charging, or any of the demand growth that's still in the pipeline.

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The Governor Responded — But the Relief Is Limited

The rate crisis was impossible to ignore politically. When Governor Mikie Sherrill took office on January 20, 2026, her very first executive orders were on this exact issue. She declared a State of Emergency on Utility Costs, directed the Board of Public Utilities to freeze rate hikes, ordered bill credits to be delivered to ratepayers by July 1, 2026, and signed a second order to fast-track new in-state solar, battery storage, and nuclear generation.

I respect that the state is taking this seriously. The Governor's Executive Order 2 specifically directs the NJBPU to accelerate solar and battery storage deployment — and in early March, the Board approved 355 megawatts of new battery storage projects and launched the next round of competitive solar solicitations. That's real movement.

But here's the honest reality: state-level intervention can cushion the problem, it can't eliminate it. Even with the executive orders in place, some utilities are still seeing small rate increases in June 2026. And energy experts have raised a legitimate concern that deferred rate increases simply get pushed to 2027 — meaning the pressure building in the system doesn't disappear, it just gets rescheduled.

The Governor's orders are a band-aid on a structural wound. The fundamental issue is that New Jersey depends on a regional wholesale electricity market it doesn't control. PJM sets the price. New Jersey pays it. The only durable solution — for the state and for individual homeowners — is to generate more power locally, reducing dependence on that market.

Which is exactly what rooftop solar does.

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What This Means for Your Bill Going Forward

Let me be direct about the trajectory, because I think homeowners deserve the full picture rather than false reassurance.

The near-term outlook for New Jersey electricity rates is one of continued pressure:

• The June 2025 rate hike is already locked into your bills and won't be reversed — the credits the Governor ordered will partially offset what's coming in summer 2026, but they don't undo the underlying rate structure.
• The 2026/2027 capacity auction came in at $329.17/MW-day — higher than the auction that caused last year's crisis. That's the market price that feeds into your June 2026 bill.
• Long-term demand growth isn't slowing. New data centers are being built throughout the PJM region. Electric vehicle adoption is climbing. The loads on this grid are increasing faster than new generation is being added.
• New generation takes years to come online. Even if PJM accelerates its interconnection queue today, projects currently applying won't be producing electricity before 2030. The supply-demand gap isn't closing quickly.

The experts who study this aren't predicting a return to the rate environment of 2020 or 2021. They're describing a new, structurally higher baseline — with continued volatility tied to auction cycles, extreme weather, and demand growth.

I tell my customers: the utility's rate is the one variable in your energy cost that you cannot control. A solar system with a fixed-payment loan is the one variable you absolutely can.

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The Solar Math Just Got Even More Compelling

One of the things that gets lost in the conversation about rate hikes is what they do to solar's financial case.

Solar savings aren't calculated in a vacuum. They're calculated against the price of electricity you're no longer buying from the grid. Every time that price goes up, the value of every kilowatt-hour your panels produce goes up with it.

Here's what that looks like concretely. A properly sized solar system in New Jersey offsets roughly 9,000–11,000 kWh of grid electricity per year. At the pre-2025 average rate of around $0.17/kWh, that's about $1,530–$1,870 in annual savings. At today's post-hike rate of $0.20–$0.26/kWh, that same system saves $1,800–$2,860 per year.

The system didn't change. The savings grew — because the rate you're not paying went up.

Under New Jersey's net metering program, every kilowatt-hour your panels send back to the grid is credited at the full retail rate. As that retail rate climbs, so does the value of your excess production. Your solar system becomes more valuable to you every time PSE&G raises its rates.

The system I help you install today locks in your energy cost. The grid rate goes wherever the next PJM auction sends it. Those two things are no longer connected once your panels are live.

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Frequently Asked Questions

Why did my New Jersey electric bill go up so much in 2025?

The primary cause was PJM Interconnection's 2024 capacity auction, where wholesale electricity capacity prices jumped from roughly $29/MW-day to nearly $270/MW-day — an 800% increase in one auction cycle. New Jersey utilities are required to pass those costs to customers, resulting in 17–20% bill increases that went into effect June 1, 2025.

Is New Jersey's electricity rate the highest in the country?

Not overall — New Jersey ranked 18th in total electricity cost per household in 2025. But it saw the largest rate increase of any of the 50 states, at 16.9%. That means NJ ratepayers were hit harder by a single-year hike than anywhere else in the nation.

Will rates come back down now that Governor Sherrill issued her executive orders?

The executive orders provide some relief through bill credits and rate freeze efforts, but energy experts note that the structural supply-and-demand pressures driving PJM prices aren't resolved by state-level intervention. Some utilities are still seeing small increases in June 2026. Long-term relief depends on significant new generation coming online — which takes years.

Will solar actually protect me from future rate increases?

Yes — in a meaningful way. A solar system with a fixed-payment loan locks in your monthly energy cost. When the utility raises rates, the value of every kilowatt-hour your panels produce increases, but your loan payment doesn't. Over time, the gap between what you're paying and what your neighbors on the grid are paying widens in your favor every time a rate hike hits.

Do I need to pay anything upfront to go solar with Solar 4 Heroes?

No. We offer $0-down solar loans where you own the system from day one and make a fixed monthly payment. There's no escalator, no annual adjustment, and no surprises. Most of our customers find their monthly loan payment is at or below what they were already paying the utility — so the switch is either cash-flow neutral or immediately cash-flow positive.

Is solar worth it in New Jersey now that the federal tax credit is gone?

Yes — New Jersey's state incentive stack remains one of the strongest in the country. The SREC-II program pays you $85 per megawatt-hour for 15 years. Net metering credits your excess production at the full retail rate. You get automatic sales tax and property tax exemptions. And at today's elevated electricity rates, the bill savings alone make a compelling case even without a federal credit.

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The Bottom Line: The Rate Crisis Is a Structural Problem. Solar Is a Structural Solution.

What happened in 2025 wasn't a fluke. It wasn't a one-time anomaly that's going to correct itself. It was the result of years of underinvestment in new generation, a growing demand surge from data centers and electrification, and a regional grid structure that New Jersey ratepayers fund but the state doesn't control.

Governor Sherrill is doing what she can. But her own executive orders acknowledge that the real, durable solution is more in-state power generation — specifically solar and battery storage. She's right. The state needs more distributed power. So does your household.

A solar system doesn't fight PJM. It makes PJM irrelevant to your electricity bill.

I've been doing this for years in New Jersey, and I can tell you: the homeowners who acted after the first rate hike are now insulated from the second one. The homeowners who waited are opening bigger bills and calling me now.

I'd love to show you what your specific home could look like with solar — real numbers, real timeline, no pressure. That's what we do at Solar 4 Heroes.

Solar made easy.

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Solar 4 Heroes serves homeowners across CT, DE, FL, MA, MD, NH, NJ, NY, PA, RI, and VA. Call us at (856) 308-5144 or reach out at cj@solar4heroes.com.