An Abundance Strategy: “Don’t Make No Sense”
As the WSJ reports, electricity prices have jumped 6% nationwide over the last year. That’s about twice as much as overall inflation, writes the WSJ editors.
That news seems to be sinking in for NJ voters. The governor’s race is tightening in that state, and the cost of juice has become a political flashpoint.
Who to Blame?
During the Joe Biden administration, Democrats downplayed surging electricity prices.
Residential electric rates increased 32% over the last five years nationwide, and even more in states like New Jersey (53%) and California (63%).
Now Democrats are blaming the GOP’s new tax bill, which rolls back future subsidies for solar and wind.
Projects, like wind projects, still can qualify for tax credit if (1) they begin operating before the end of 2027, or (2) start construction by 4 July 2026. That means a wind project in the pipeline can continue to claim tax credits for 10 more years once it begins operating. The real problem, according to the WSJ, is the state’s hostility to fossil fuels.
New Jersey’s rates spiked 22% this summer as tight power supplies pushed up wholesale prices. Federal emissions regulations, the state’s renewable energy mandate, and rich green-energy subsidies have made baseload nuclear and coal plants uneconomic. Five large coal plants and one nuclear reactor in the state have shut down since 2017.
Rather than changing their bad policies, Democrats blame the business.
PJM Interconnection runs the regional grid and uses capacity auctions to ensure plants can provide power on demand. Payments by utilities in those auctions, which ultimately are paid by electricity consumers, jumped to $16.1 billion this year from $2.2 billion in 2023. New Jersey Gov. Phil Murphy last month ordered an investigation into PJM, which he alleges is manipulating markets.
When the Democrat governor withheld permits to block a 115-mile pipeline that aimed to move cheap natural gas fracked in Pennsylvania to his state, New Jersey’s natural gas plants were forced to pay 35% more for fuel this year than the nationwide average. Adding to NJ’s misery, constrained gas supply has limited the construction of new power plants.
Most individuals living in New Jersey heat their homes with gas. When frigid weather hits, fuel shortages can occur, driving up prices for power plants. Fuel prices paid by New Jersey’s gas plants spiked 10-fold this past January, reports the WSJ.
Phil Murphy, present governor of NJ, issued an executive order to deter investment in new gas plants, resulting in fuel prices paid by New Jersey’s gas plants spiking 10-fold this past January. Murphy also championed costly offshore wind projects, which had the unintended consequence of scaring off developers due to skyrocketing costs. Several projects were either cancelled or frozen in the past two years, notes the WSJ.
The NJ governor’s joining a regional cap-and-trade program that required fossil-fuel plants to pay for their CO2 emissions also contributed to higher electricity prices. Is anyone surprised that Democratic Rep. Mikie Sherrill, now running to succeed Phil Murphy, is hurting in the polls?
In a recent TV ad, Ms. Sherril, a Navy veteran and a helicopter pilot, promises to declare “a state of emergency on utility costs using emergency powers to end these rate hikes and drive down your bills.” How will Ms. Sherril do this? By suing PJM and President Trump, “to accelerate the development of cheaper and cleaner energy sources.”
Sunshine Required
Lawsuits, however, will not change market reality or create a more reliable electricity system.
Ms. Sherrill promises to streamline permitting for solar and battery projects, but these won’t provide enough power in a state like New Jersey without abundant sunshine year-round. Her plan doesn’t include easing government obstacles to gas power plants or pipelines.
Mr. Ciattarell, the Republican contender, is running on an “all of the above” energy approach. He would withdraw from the cap-and-trade program.
Fueling (Ciattarell’s) rise in the polls is voter frustration with the results of Mr. Murphy’s policies and eight years of Democratic control in Trenton. Governor Murphy’s job approval rating is 35%, which is lower than Mr. Trump’s in the state.
Abundance vs Scarcity
Ms. Sherril, like other Democrats, is feinting toward what they call an “abundance” agenda. It calls for reducing the cost of living by increasing the supply of energy, housing, and more.
Abundance is a nice word, notes the WSJ. “But the actual Democratic policy in New Jersey and nationwide is deliberate energy scarcity—and the higher prices that go with it.”
