New Jersey businesses face an 833% electricity rate increase that started June 2025. These five proven strategies help companies reduce energy costs and minimize the financial impact on operations.
Your 2025 electricity bills are about to become your biggest business expense nightmare. The PJM capacity auction results show rates jumping 833% from $29 to $270 per megawatt-day, which translates to an extra one to four cents per kilowatt hour on your monthly bills.
If you're like most business owners, you're probably staring at your current energy costs thinking there's nothing you can do. The rate increase is locked in, your supplier contracts are what they are, and you just have to accept higher operating expenses. But that's not entirely true.
While you can't avoid the rate increase entirely, you can on your bottom line. The key is understanding that capacity charges are tied to your peak demand periods, and there are specific strategies that can help you minimize these costs.
Your capacity costs are determined by your electricity usage during the five highest demand periods each year. These typically occur on the hottest summer afternoons when everyone's air conditioning is running full blast.
You can reduce your capacity tag by shifting energy-intensive operations away from these peak periods. Consider running heavy machinery, charging equipment, or other high-demand processes during off-peak hours like early morning or late evening.
Many businesses stick with their current energy supplier without exploring better options. Energy procurement isn't just about finding the lowest rate per kilowatt hour anymore.
Look for suppliers that offer peak demand management programs, flexible pricing structures, or capacity cost mitigation services. Some suppliers now offer specific products designed to help businesses manage the impact of capacity charge increases.
Demand response programs pay you to reduce your energy usage during peak periods. These programs are especially valuable now because they directly address the capacity charge problem.
When you participate in demand response, you're essentially getting paid to lower your peak demand, which reduces your capacity costs. Many businesses can earn hundreds or thousands of dollars annually while cutting their capacity charges.
Energy efficiency improvements provide double benefits in the new rate environment. First, they reduce your overall energy consumption, lowering your base costs. Second, they can help you reduce peak demand, which directly impacts your capacity charges.
Focus on upgrades that specifically target peak period usage, such as more efficient HVAC systems, LED lighting with smart controls, or variable frequency drives on motors.
Solar panels, battery storage, and other on-site generation can help you reduce peak demand from the grid. While the upfront investment is significant, these systems can provide substantial long-term savings, especially with the new capacity charge structure.
Battery storage is particularly effective because it allows you to store energy during off-peak periods and use it during peak times.
The challenge with implementing these strategies is knowing which ones make the most sense for your specific business. Every company has different usage patterns, operational requirements, and financial constraints. This is where working with an energy consultant can make a significant difference.
Mike O'Reilly from The Energy Consultant NJ specializes in helping New Jersey businesses understand their specific energy profiles and develop cost management strategies. His no obligation energy analysis service examines your current usage patterns, identifies your peak demand periods, and provides specific recommendations for your situation.
The analysis process is straightforward. You provide basic business information and upload a recent electricity bill through a secure online portal. The assessment identifies exactly how the rate increase will impact your costs and which strategies would be most effective for your operations.
The 2025 rate increase is inevitable, but its impact on your business doesn't have to be devastating. By taking action now, you can implement strategies that will save you thousands of dollars annually and position your business to better manage future energy cost challenges.
Don't wait to see how these rate increases affect your business. The sooner you and implement cost management strategies, the more you can minimize the financial impact of New Jersey's electricity rate shock.
