N.J. BGS Auction Produces Lower Prices for Mass Market Customers

The New Jersey BPU has posted results from the annual Basic Generation Service auctions.

The 2012 Fixed Price auction, for one-third of the supply to serve default service customers under 750 kW for the three year period starting June 1, 2012, resulted in a closing price as follows (¢/kWh):

Atlantic City Electric: 8.510

Jersey Central Power & Light: 8.176

Public Service Electric & Gas: 8.388

Rockland Electric: 9.251

These prices will be blended with existing supplies procured in prior BGS auctions.

The BPU said that this year's auction result is expected to reduce the costs of electricity for residential ratepayers ranging from 6.4% to 1.0%, depending on their Electric Distribution Company (EDC).

The average price obtained in this year's Fixed Price auction ($0.08344 per kilowatt hour) was significantly lower, 19.8% lower, than the electricity procured in the 2009 auction ($0.10404 per kWh), which will be replaced by supplies purchased in this year's auction. This year's FP average price is also lower than that obtained in last year's auction ($0.09528 per kWh).

The 2012 CIEP Auction, for customers over 750 kW on hourly service, resulted in a closing price ($/MW-day) as follows, which is added to hourly energy prices:

Atlantic City Electric: 113.26

Jersey Central Power & Light: 126.4

Public Service Electric & Gas: 128.34

Rockland Electric: 133.25

The winning prices for the CIEP Auction increased by approximately 7.2% on a weighted average basis across the four utilities. "A major factor driving the CIEP price increase was PJM's capacity market price called Reliability Pricing Model (RPM), which increased by 39.5%. While other factors offset that increase to a considerable extent, the BPU is advocating on behalf of New Jersey ratepayers before PJM, the regional grid operator, and the Federal Energy Regulatory Commission (FERC) to address inequities of the RPM," the BPU said.

Asked about calls to shorten the laddering of the Fixed Price auction, BPU President Robert M. Hanna said that the BPU would proceed with "deliberation and care," noting that simply because current market prices are favorable and augur to shorten the laddering, a political-economic shock (such as closing the Strait of Hormuz) could spike prices and support the use of longer laddering.

The winning bidders of the Fixed Price (FP) Auction were:
Citigroup Energy Inc.
ConocoPhillips Company
Constellation Energy Commodities Group, Inc.
DTE Energy Trading, Inc.
Hess Corporation
J.P. Morgan Ventures Energy Corporation
Macquarie Energy LLC
NextEra Energy Power Marketing, LLC
Noble Americas Gas & Power Corp.
PSEG Energy Resources and Trade LLC
TransCanada Power Marketing Ltd

The BGS-CIEP Auction winners are:
ConocoPhillips Company
Consolidated Edison Energy, Inc.
Constellation Energy Commodities Group, Inc.
DTE Energy Trading, Inc.
NextEra Energy Power Marketing, LLC
PSEG Energy Resources and Trade LLC