Posted by Tom Dufraine on Jan 26, 2021 12:15:23 PM
Not everyone is aware of this, but retail electricity prices include many components outside of just the actual energy supply cost. In PJM, the NITS charge, or ”Network Integration Transmission Service“ are transmission rates that are regulated by the Federal Energy Regulatory Commission (FERC) and apply to all retail electricity suppliers. This includes default service suppliers. NITS rates are the mechanism by which transmission owners recover their annual transmission costs and revenue requirements from PJM network customers. It covers upgrades, maintenance, and transmission projects on the electricity transmission grid.
These charges are allocated by both zone and utility based on the cost of the project. Since the costs vary by zone, the NITS rates are adjusted up or down based on each individual zone’s share of the cost of the projects and maintenance. These charges are updated annually for each zone and utility.
In most deregulated states, including NJ and PA, these charges are included in a fully fixed supply contract. Contrary, in Ohio, NITS charges are actually part of the utility line items. In the event of there being a NITS increase, suppliers are required by FERC to pass that cost onto the customer as it must be remitted back to the governing body. All supply contracts have a change-in- law and regulation clause which supports this pass-through.
These increases will be shown as a pass-through item either on your utility or supply bill depending on how you are billed. These increases should be reflected on invoices starting January 2021. See chart below for 2021 increase rates. It is a best practice to stay up to date on the latest changes in the market that may affect your energy bill by reaching out to your Energy Advisor with any questions or concerns!