New Jersey Staff Propose a 3 Percent Peak Demand Cut per Utility Under a Virtual Power Plant Bridge Program
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Marin Holt
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- 7 minutes read
- Peak Demand Reduction Target: 3 percent per EDC service territory
- Bridge Program Start: no later than July 1, 2027
- Comment Deadline: August 17, 2026
- BPU Docket: QO26030099
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New Jersey regulators want every electric utility in the state to cut peak demand by at least 3 percent. Customer-owned batteries, thermostats and EV chargers would do the work. Board of Public Utilities staff set that target in a virtual power plant straw proposal. The proposal landed on July 15, 2026 under docket QO26030099. The bridge program must start no later than July 1, 2027. Written comments close on August 17, 2026 at 5 p.m. Governor Mikie Sherrill ordered the board to build the program in Executive Order No. 2. That order dates to January 20, 2026 and declared a statewide energy emergency.
How the Program Works
Staff split the plan in two. Phase one runs from 2027 to 2029. The four electric distribution companies administer it. Staff call the design expressly transitional. Phase two opens the market in 2029. A standing open-access tariff then replaces the utility-run program.
The proposal stays technology neutral. Behind-the-meter storage qualifies. So do smart thermostats, direct load control platforms and existing demand response customers.
Staff laid out three ways to pay participants. The first is an enrollment payment. The second covers opportunity cost and capacity reservation. The third pays for measured performance on dispatch. A device owner may also stack the distribution payment with PJM wholesale market revenue.
Enforcement Reality
The 3 percent floor applies per service territory, not statewide. Each utility must meet it on its own system. Staff wrote the number as a minimum rather than a goal. The proposal is still a straw, so nothing binds anyone until the board votes.
The open question is who owns the hardware. Staff asked whether a utility should own battery assets as a bounded exception to the open-access default. That answer decides whether the 2029 market is competitive or captive.
Why It Matters
New Jersey already pays for capacity through PJM. Those charges keep climbing. A 3 percent peak cut across four territories removes load at the hours that set the bill. The state has also spent heavily on batteries through the Garden State Energy Storage Program. A VPP tariff gives those batteries a second revenue stream. It improves the economics of the next procurement round.
Watch the money, not the target. Utility Dive reports PSE&G pays about $5,000 up front for an 8-kW home battery today. Delmarva pays about $1,080 a year for performance in a Delaware pilot. Those are different bets. An upfront payment buys equipment and hopes it shows up. A performance payment buys the dispatch itself.
Pepco Holdings executive Andrew Bayne questioned at the July 30 stakeholder meeting whether $1,000 a year is worth it to a customer. That doubt is the real risk. A 3 percent mandate with weak enrollment economics lands back on the utility. The utility then recovers the cost from the same ratepayers the program is meant to help.
Critical Perspective
Staff set a 3 percent floor and left the price blank. The proposal names three compensation pathways, enrollment, capacity reservation, and pay-for-performance, and attaches a dollar figure to none of them. The same document asks whether an electric distribution company should own battery assets as a bounded exception to the open-access default. Read those two together. The mandate creates the obligation, and the exception would let the mandated party supply its own compliance from ratebased hardware. Pepco Holdings questioned whether $1,000 a year moves a customer at all, and weak enrollment is exactly the pressure that pushes an EDC toward owning the assets. Comments close August 17, 2026. The ownership question, not the 3 percent, decides who captures the 2029 market.
Sources
- New Jersey Board of Public Utilities
- NJBPU VPP Straw Proposal (PDF)
- Utility Dive
- EnergyChoiceMatters
- ROI-NJ
