What Gov. Sherrill’s First Executive Order Does To Address Soaring NJ Electric Bills

This story was originally published by The Jersey Vindicator. Sign up for their newsletter.

By Krystal Knapp, The Jersey Vindicator

New Jersey Gov. Mikie Sherrill on Tuesday signed her first executive order declaring an electricity affordability “state of emergency,” directing state regulators to issue bill credits, scrutinize utility charges, and explore an overhaul of the power system as residents face what she called a crisis in energy costs.

Executive Order No. 1 orders the state Board of Public Utilities to provide “Residential Universal Bill Credits” to offset increases in the cost of electricity supply scheduled to take effect in 2026, relying on the same or similar funding sources the board used in an August 13, 2025, order that provided credits to customers.

The state’s Board of Public Utilities (BPU) must issue those credits or an initial set of credits no later than July 1, 2026.

Sherrill signed the order Jan. 20, 2026, the same day she was sworn in as New Jersey’s 57th governor at the New Jersey Performing Arts Center in Newark. In her inaugural address, she announced she would declare a State of Emergency on Utility Costs and move immediately to give regulators new powers to rein in rate hikes and “finally provide families with real relief on their energy bills.”

The order frames electricity affordability as the new administration’s central economic priority.

“The top priority of this Administration is to make New Jersey more affordable for all New Jersey residents, families, and businesses,” the order states, calling electricity “a critical resource for the health, safety, welfare, and prosperity of New Jerseyans, and fundamental to the State’s economic stability and growth.”

Declaring an electricity ‘state of emergency.’

In the order, Sherrill declares that “an emergency exists throughout the State of New Jersey” due to rising electricity costs, which she describes as having reached “the point of crisis for many residents and families.”

From June 2023 to June 2025, the order notes, the average residential electricity price in New Jersey rose by “well over 33%,” while the average price for all customers, including commercial users, rose by nearly 30%. The order warns that without “serious intervention,” prices will continue to rise at “an extraordinary pace.”

The order ties much of the recent surge to systemic problems in the federally regulated PJM regional power market, the independent grid operator covering 13 states and Washington, D.C. It cites record-setting capacity prices in each of the last three PJM market auctions, including capacity prices that increased by more than 800% in 2024.

The December 2025 PJM auction “would have seen capacity prices climb 60% higher, if not for a temporary price cap instituted as a result of legal action against PJM,” the order states.

The order also cites federal tariffs on clean energy technology components and policies that “hinder the development of solar and other renewable technologies” as factors that will worsen the electricity supply shortage.

“New Jerseyans’ residential electricity bills are unlikely to fall below June 2025 levels anytime in the near future and are expected to further increase absent meaningful action on several fronts,” the order says.

Bill credits and a review of charges

Alongside the declaration of emergency, Executive Order No. 1 lays out a series of specific directives to BPU and other state agencies aimed at both immediate and longer-term relief.

In addition to requiring Residential Universal Bill Credits by July 1, 2026, the order instructs BPU to:

• Review all components and rationales for the Societal Benefits Charges that appear on electric bills, as well as the budget of the Clean Energy Program the board administers, which is funded in part through those charges.
• Prioritize revisions to the Clean Energy Program budget for Fiscal Year 2026 and issue a “true-up” budget no later than May 1, 2026, based in part on actual expenses from Fiscal Year 2025. That revised budget must prioritize direct ratepayer relief to offset electricity supply increases for residential customers and identify ways to increase support for energy efficiency programs for income-qualifying ratepayers.
• Consider opportunities to reduce Societal Benefits Charges for all electric distribution utilities without cutting funding for direct energy assistance programs or support for income-qualifying customers, including by directing available Regional Greenhouse Gas Initiative proceeds or other resources to those programs.
• Consider pausing, placing in abeyance or modifying the schedule of proceedings in which electric utilities seek approval for rate increases or cost recoveries, “to the extent permitted by law,” given “the extent of the affordability crisis.”

The order emphasizes that investor-owned electric utilities in New Jersey do not earn profits on electric supply itself, but do earn profits on transmission and distribution infrastructure investments and recover operating and maintenance costs, depreciation and other expenses through rates approved by BPU.

It directs BPU to “demand greater transparency and accountability” from electric distribution utilities and to use available funds to provide short-term rate relief to residential customers “consistent with BPU’s recent practice.”

RGGI funds and long-term reform

The order also reaches beyond immediate bill credits and rate proceedings, pushing the administration toward a broader rethinking of the state’s energy and utility model.

Within 30 days, BPU, the Department of Environmental Protection and the Economic Development Authority must confer on the use of Regional Greenhouse Gas Initiative proceeds for ratepayer relief and issue a public statement outlining their conclusions.

That statement must explain how the agencies intend to address ratepayer relief in the 2026–2028 RGGI Strategic Funding Plan, whether an amendment or addendum is needed, and “the most efficient and effective means to provide timely cost relief to low- and middle-income ratepayers.”

Within 180 days, BPU must complete and issue a study on modernizing the traditional electric distribution utility business model. The study must:

• Address the relationship between the current business model and recent trends in electricity affordability.
• Identify “potential policy pathways and opportunities” for long-term reductions and stabilization of electric bills.
• Consider options including, but not limited to, making utility revenue models less dependent on capital spending on infrastructure; expanding performance-based ratemaking — including performance measures such as the speed at which utilities approve interconnection of new generation; multi-year rate plans; reduced utility return on equity; state review of supplemental transmission projects; “least-cost” resource testing requirements; greater use of asset securitization; and changes to regulations governing infrastructure investment programs.

BPU must hold at least one public stakeholder session to inform the development of the study.

If the board seeks outside technical or professional help to complete the study, the order instructs BPU and the Department of Treasury’s Division of Purchase and Property to prioritize the procurement and aim to complete it within 30 days, using “the most time-efficient manner” allowed by procurement laws.

Affordability beyond the light bill

While the order focuses on electricity, it places the energy crisis within a wider affordability squeeze facing residents.

It cites federal data showing New Jersey homeowners rank fifth-highest in homeowner cost burden among all states, with nearly one-third of homeowners with a mortgage spending at least 30% of their income on housing. More than half of renters in the state are also considered cost burdened, the order notes.

It points to housing costs — both median home prices and median gross rents — that are about 20% higher than national medians, as well as average food prices rising faster than overall inflation. The order says a recent analysis found that from 2024 to 2025, the amount of household income needed for a New Jersey family to live comfortably increased by more than 12%, the second-highest such jump in the country, while wage growth “slowed meaningfully” in the past year.

“Many of New Jersey’s low- and middle-income families struggle to afford basic necessities, from utilities to groceries to healthcare,” it states, adding that “numerous businesses and enterprises throughout the State have been impacted by increased energy costs over the past year.”

In her inaugural speech, Sherrill told New Jerseyans she would “spend every minute trying to make New Jersey more affordable and open doors to opportunity across our state,” and said the new administration stood for “Lowering costs. Taking care of our kids. Making government accountable to the people.”

Executive Order No. 1 puts electricity bills at the center of that agenda.

Legal scope and limits

The order underscores that BPU, which is “in but not of” the Department of the Treasury, has authority to set just and reasonable rates, investigate utilities and require them to furnish safe and adequate service.

At the same time, it adds legal disclaimers that the order does not create new legal rights for regulated entities or others, does not create a private right of action, and cannot be used as the basis for legal challenges to rules, permits, licenses or other state actions or inactions. It also specifies that nothing in the order supersedes federal, state or local law.

BPU is given discretion to determine the “necessary and appropriate steps” to carry out the directives.

The full text of Executive Order No. 1

WHEREAS, the top priority of this Administration is to make New Jersey more affordable for all New Jersey residents, families, and businesses; and

WHEREAS, electricity is a critical resource for the health, safety, welfare, and prosperity of New Jerseyans, and fundamental to the State’s economic stability and growth; and

WHEREAS, the current cost of electricity has reached the point of crisis for many residents and families, and requires bold action to provide short-term relief and medium and long-term strategies and reforms to improve our energy system; and

WHEREAS, retail electricity rates have risen dramatically—both suddenly and substantially—in recent years, and, without serious intervention, prices will continue to rise at an extraordinary pace; and

WHEREAS, from June 2023 to June 2025 the average residential electricity price in the State rose by well over 33 percent, and the average electricity price for all customers in the State, including commercial customers, rose by nearly 30 percent, and prices are expected to continue to rise due to systemic issues within the federally-regulated regional power market in which New Jersey participates, which is administered by independent grid operator PJM; and

WHEREAS, the December 2025 PJM auction would have seen capacity prices climb 60 percent higher, if not for a temporary price cap instituted as a result of legal action against PJM; and

WHEREAS, electricity rates in New Jersey are among the highest in the continental United States and in the Mid-Atlantic region, and during the summer of 2025 New Jersey experienced some of the highest electricity price increases of all states that participate in the PJM regional power market; and

WHEREAS, New Jersey families are burdened by increasingly high costs across the board, from average food prices rising faster than overall inflation to housing costs, including median home prices and median gross rents in the State that are each 20 percent higher than the national median; and

WHEREAS, New Jersey homeowners rank fifth-highest in homeowner cost burden among all states, and recently published federal census data indicate that nearly one-third of New Jersey homeowners with a mortgage are considered “cost burdened” by housing in that they spend at least 30 percent of their income on housing costs, and more than half of renters in New Jersey are also cost burdened; and

WHEREAS, a recent analysis found that from 2024 to 2025, the amount of household income needed for a New Jersey family to live comfortably increased over 12 percent, which was the second-highest such increase in the nation, and other data indicate that wage growth slowed meaningfully in the last year; and

WHEREAS, many of New Jersey’s low- and middle-income families struggle to afford basic necessities, from utilities to groceries to healthcare; and

WHEREAS, numerous businesses and enterprises throughout the State have been impacted by increased energy costs over the past year; and

WHEREAS, the recent rise in electricity bills in our State is due to several factors, including but not limited to the escalating cost of transmission and distribution infrastructure on which the grid relies, volatility in the price of natural gas, and the skyrocketing price of the future supply of reliable, wholesale electricity—also known as capacity—in the regional PJM market; and

WHEREAS, the PJM region, which spans 13 states and Washington D.C., has hit record-setting capacity prices in each of the last three market auctions, and saw capacity prices increase by over 800 percent in 2024; and

WHEREAS, the dramatic increase in PJM capacity prices, which is expected to continue over the coming years, is due to a number of factors, including peak electricity demand outpacing supply; the surge and anticipated spread of new customers like data centers that consume significant amounts of electricity; retirement of older, uneconomic generation sources like coal-fired power plants;

PJM’s delay in interconnecting new, clean generation sources to the grid; and flaws in PJM’s market design that have failed to adequately produce new generation to meet growing demand; and

WHEREAS, regional capacity prices impact what most New Jersey electricity customers pay on their bills for electricity supply, and the forecast for regional capacity prices likely indicates that New Jerseyans’ electric bills will remain significantly elevated in at least the near- to mid-term; and

WHEREAS, the federal government’s recent tariffs on clean energy technology components and policies that hinder the development of solar and other renewable technologies will exacerbate the electricity supply shortage; and

WHEREAS, New Jersey’s four investor-owned electric distribution utilities pass through to customers the cost of electric supply and do not earn a profit on the provision of electric supply; and

WHEREAS, the electric distribution utilities earn a profit on, among other things, qualifying investments in transmission and distribution infrastructure, as they earn a return on those investments from electricity customers at rates approved by the Board of Public Utilities (“BPU”); and

WHEREAS, the electric distribution utilities pass through to customers operating and maintenance expenses as well as property depreciation, at rates approved by BPU; and

WHEREAS, other major components of electric bills include the cost of electric distribution utilities’ investments in, and return on, energy efficiency programs, the cost of administering the State’s solar programs set by statute, and the Societal Benefits Charge (“SBC”), through which electric distribution utilities recover expenses and financially benefit from their involvement in energy efficiency and other societal benefit programs enumerated in N.J.S.A. 48:3-60, among other things; and

WHEREAS, the State’s electric distribution utilities frequently submit requests to BPU seeking approval for requested rate increases or proposed cost recoveries; and

WHEREAS, under N.J.S.A. 48:2-13, subject to certain statutory exceptions, BPU has mandatory jurisdiction over “all services necessary for the transmission and distribution of electricity and gas, including but not limited to safety, reliability, metering, meter reading and billing”; and

WHEREAS, due to the myriad factors noted above, New Jerseyans’ residential electricity bills are unlikely to fall below June 2025 levels anytime in the near future and are expected to further increase absent meaningful action on several fronts; and

WHEREAS, the ongoing electricity affordability crisis in our State constitutes a state of emergency that warrants decisive leadership and coordinated action, both to provide short-term relief and to initiate long-term reform; and

WHEREAS, it is therefore necessary to effectively freeze electricity supply rate increases charged to customers and to demand greater transparency and accountability from the State’s electric distribution utilities, in addition to taking steps to expand New Jersey’s power generation and to hold the regional grid operator, PJM, accountable; and

WHEREAS, BPU is located in but not of the Department of the Treasury and is part of the Executive Branch; and

WHEREAS, BPU has the authority to set just and reasonable public utility rates, to investigate any matter concerning any public utility, and to require any public utility to furnish safe, adequate, and proper service; and

WHEREAS, the emergency warrants BPU’s additional use of available funds to provide short-term rate relief to residential electricity customers, consistent with BPU’s recent practice;

NOW, THEREFORE, I, MIKIE SHERRILL, Governor of the State of New Jersey, by virtue of the authority vested in me by the Constitution and by the Statutes of this State, do hereby declare that an emergency exists throughout the State of New Jersey; and

I hereby ORDER and DIRECT:

1. BPU shall:

a. Provide for Residential Universal Bill Credits (“RUBCs”) to offset increases in the cost of electricity supply due to take effect in 2026, relying on the same or similar sources of funding addressed in BPU’s order of August 13, 2025, that provided for RUBCs, among any others that are applicable; and

b. issue RUBCs, or an initial set of RUBCs, no later than July 1, 2026.

2. BPU, the Department of Environmental Protection, and the Economic Development Authority shall, within 30 days, confer about the use of Regional Greenhouse Gas Initiative (“RGGI”) proceeds for ratepayer relief and issue a public statement of their conclusions, as they did prior to BPU’s order of August 13, 2025, which shall include an explanation of how they intend to address ratepayer relief in the 2026-2028 RGGI Strategic Funding Plan consistent with the priorities and directives established in this Order, and of whether any amendment or addendum to that plan is needed, as well as an explanation of the most efficient and effective means to provide timely cost relief to low- and middleincome ratepayers.
3. BPU shall review all components of, and rationales for the SBCs imposed on electric bills, as well as the budget of the Clean Energy Program administered by BPU, which consists in part of proceeds from SBCs.
4. BPU shall prioritize expediting revisions to the Clean Energy Program budget for Fiscal Year 2026 and, no later than May 1, 2026, issue a “true-up” budget based, in part, on actual expenses incurred during Fiscal Year 2025. The true-up budget shall also:

a. prioritize funding for direct ratepayer relief to offset increases in the cost of electricity supply borne by residential ratepayers, consistent with the priorities and directives of this Order; and

b. identify opportunities to increase support for, or investment in, energy efficiency programs for income-qualifying ratepayers to help lower those ratepayers’ energy bills.

5. BPU shall also consider opportunities to reduce the SBCs in effect for every electric distribution utility without compromising funding for direct energy assistance programs or income-qualifying ratepayers, including by directing available RGGI proceeds or other resources to those programs.
6. Given the extent of the affordability crisis, BPU shall consider pursuing a pause, abeyance, or modification of the schedule governing any proceedings in which electric distribution utilities seek approvals for rate increases or cost recoveries to the extent permitted by law.
7. Within 180 days, BPU shall complete and issue a study regarding modernization of the traditional electric distribution utility business model.

a. The study shall:

i. address the relationship between the traditional business model and recent trends

affecting electricity affordability;

ii. identify potential policy pathways and opportunities for achieving long-termreductions to, and stabilization of, electric bills; and

iii. consider opportunities including, but not limited to, making utility revenue models less dependent on capital spending on infrastructure; expansion of performance-based ratemaking, whereby performance would include, among other things, the rate at which utilities approve the interconnection of new electricity generating facilities to the grid; multi-year rate plans; reductions in utilities’ return on equity; state review of supplemental transmission projects; leastcost resource testing requirements; greater use of asset securitization; and amendments to the regulations governing infrastructure investment programs.

b. BPU shall hold at least one public stakeholder session to inform the development of the study.

c. If BPU seeks to procure the technical or professional services of a contractor to assist the completion of the study and address the affordability emergency in the State, BPU and the

Division of Purchase and Property in the Department of Treasury shall:

i. prioritize this procurement with the aim of completing the procurement within 30 days;

and

ii. conduct the procurement in the most time-efficient manner consistent with the

applicable procurement statutes.

8. BPU shall exercise its discretion to determine necessary and appropriate steps to effectuate the relevant directives i this Order.
9. Nothing in this Order shall be construed to confer and legal rights upon entities whose activities are regulated by State entities; nothing shall be construed to create a private right of action on behalf of any such regulated entities or other persons and nothing shall be used as a basis for legal challenges to rules, approvals, permits, licenses, or other action or inaction by a State entity. Nothing in this Order shall be construed to supersede any federal, State, or local law.
10. Should any part of this Order be declared to be invalid or unenforceable, or should the enforcement of or compliance with any part of this Order be suspended, restrained or barred by the final judgment of a court of competent jurisdiction, the remainde of this Order shall remain in full force and effect.
11. This Order shall take effect immediately.

GIVEN, under my hand and seal this 20th day of January, Two Thousand and Twenty-Six, and of the Independence of the United States, the Two Hundred and Fiftieth.

Mikie Sherrill
Governor

Attest:

/s/ Timothy P. Lydon

Chief Counsel to the Governor

The Jersey Vindicator is a nonprofit investigative news organization serving residents of the Garden State.