New Jersey deregulated its energy market in 1999, allowing residents to choose their electricity suppliers. The legislation aimed to introduce competition to the previously monopolized energy market.
Despite this opportunity, only about 6% of residential customers switched suppliers in 2023. "Not everyone bothers to take advantage of the opportunity to switch," said Clinton Andrews, professor of urban planning and policy development at Rutgers University and director of its Center for Urban Policy Research.
For those willing to shop around between suppliers, there is potential for better deals or a switch to renewable energy sources.
"Deregulation in New Jersey came as part of the national pattern that started in 1978 with the passage of the Public Utility Regulatory Policies Act," Andrews explained. "Deregulation very much emphasized opening up competition at the generation level, and not really at the transmission and distribution level."
The New Jersey legislature passed a bill in 1999 that allowed for energy deregulation. This means residents can choose who generates their electricity based on price, contract term, and renewable content, while utilities remain unchanged based on location.
Four major utilities service most of New Jersey: Public Service Electric and Gas (PSE&G), Jersey Central Power & Light, Atlantic City Electric, and Rockland Electric. These utilities handle transmission and distribution but residents can select their electricity generator.
Finding the best electricity rates involves considering price per kilowatt-hour, contract term, and renewable content. NJ Power Switch advises consumers: "Shopping for Energy may save you money on your electric or natural gas utility bill... it is necessary to become familiar with TPS pricing structures...”
Andrews highlighted other important factors beyond price: “As a homeowner... I want the low price... But I also want to know that the price isn’t too volatile... The final thing I would mention is reliability."
Deregulated markets can attract dishonest companies with unclear terms such as fees for high or low usage. In 2014, consumer complaints led to an investigation by state agencies. "You always want to take a 'buyer beware' view of things," Andrews cautioned.
