NJ Basic Generation Service: What It Is & What You Pay

A Montclair homeowner opens her electric bill, pays it, and moves on. She has never heard of Basic Generation Service. Neither have most of her neighbors. But that single line item, labeled something like "BGS Supply Charge," is where a meaningful chunk of her monthly payment goes, and it changes every year whether she notices or not.

Basic Generation Service is New Jersey's default electricity supply rate. If you receive electric service in New Jersey and have never actively chosen a competitive electricity supplier, you are on BGS right now. Understanding what it is, how it is priced, and what your alternatives look like is the first step toward knowing whether your bill is as low as it could be.

When New Jersey deregulated its electricity market in the late 1990s, it separated the two main components of your electric bill: delivery (the poles, wires, and meters owned by your local utility) and supply (the actual electricity commodity). Your utility, whether that is PSE&G, JCP&L, Atlantic City Electric, or Rockland Electric, still owns and operates the delivery infrastructure and will always appear on your bill for that portion.

Supply, however, can come from a competitive third-party supplier, or it can default to BGS. Basic Generation Service is that default. The NJ Board of Public Utilities (NJBPU) requires utilities to procure BGS supply on behalf of any residential or small commercial customer who has not made an active supplier choice. It is a consumer protection mechanism: no customer is ever left without electricity simply because they did not shop.

Importantly, BGS is not a fixed rate locked in for years. It is reset through a competitive wholesale process called the BGS auction, held each February for rates that take effect the following June.

Each February, the four New Jersey electric utilities hold a coordinated BGS auction overseen by the NJBPU. Wholesale electricity suppliers compete to win the right to provide supply to BGS customers, bidding on blocks of load. The winning bids lock in a supply price for a full year, from June 1 through May 31 of the following year.

Because the auction reflects actual wholesale market conditions at the time of bidding, the resulting BGS rate can swing noticeably from one year to the next. A cold winter, a tight natural gas market, or a surge in regional electricity demand can all push the auction results higher. A mild year with plentiful gas supply tends to bring them down.

The NJBPU publishes the results of each auction, and the approved rates become the BGS supply rates that utilities charge on customer bills starting each June. Customers on BGS never have to do anything to receive this rate; it applies automatically.

As of June 2026, BGS supply rates differ across the four New Jersey utilities, and so does the competitive landscape for third-party suppliers. Here is where things stand.

PSE&G: The BGS rate is approximately 19.9 cents per kWh. The lowest competitive supplier rate available is around 17.6 cents per kWh, which works out to roughly an 11% savings on the supply portion of the bill. For a PSE&G customer using a typical amount of electricity each month, switching to a competitive supplier currently makes financial sense.

Atlantic City Electric: The BGS rate is approximately 18.2 cents per kWh. The lowest available supplier rate is around 16.7 cents per kWh, about an 8% savings on supply. Competitive options exist here, though the gap is narrower than in PSE&G territory.

JCP&L: The BGS rate is approximately 14.6 cents per kWh, which is actually lower than the cheapest competitive supplier rate currently available (around 16.0 cents per kWh). JCP&L customers are better served staying on BGS at this time.

Rockland Electric: The BGS rate is approximately 18.8 cents per kWh. Competitive supplier offers in this territory are sparse, with the lowest around 18.9 cents per kWh. There is no meaningful savings opportunity for Rockland customers right now.

These figures apply to the supply component only. Delivery charges, taxes, and other fees are not affected by supplier choice and will remain on your utility bill regardless. For live, up-to-date rates across all four utilities, visit ElectricRates.org's New Jersey page.

Seeing a lower rate from a third-party supplier does not automatically mean a customer saves money over a full year. A few things are worth keeping in mind.

First, competitive supplier rates in New Jersey come in two main forms: fixed-rate contracts and variable-rate plans. A fixed rate locks in the per-kWh supply price for a set term, often 6, 12, or 24 months. A variable rate can change monthly and may start below BGS before rising above it later. Reading the contract terms carefully, particularly the cancellation policy and any fees, matters as much as the headline rate.

Second, BGS resets each June. A competitive supplier rate locked in today will be compared against a new BGS rate next summer. If wholesale markets soften and next year's BGS auction produces a lower rate, a customer on a long-term fixed contract could end up paying more than BGS.

Third, the comparison should always be apples to apples: supply rate versus supply rate, not total bill versus total bill. Delivery charges do not change based on supplier choice.

A New Jersey customer's current supply rate appears on their electric bill, usually labeled as the BGS rate or the price per kWh under the supply section. If a customer is already with a competitive supplier, the rate and contract terms will appear there instead.

To compare what competitive suppliers are currently offering against the BGS rate for your utility territory, ElectricRates.org's New Jersey comparison tool shows live supplier offers side by side. The NJBPU also maintains consumer information resources at its official website, including guidance on what to look for in a competitive supply contract and how to file a complaint if something goes wrong.

Switching suppliers in New Jersey does not interrupt electric service. The utility continues delivering electricity and handling outages regardless of which supplier a customer chooses. A customer who switches and later wants to return to BGS can do so, though contract cancellation terms with the supplier may apply.

For income-qualified New Jersey households, the supply rate is only part of the picture. Several programs reduce the overall electric bill regardless of whether a customer is on BGS or with a competitive supplier.

The Universal Service Fund (USF), administered through the NJBPU, provides bill credits to eligible low-income customers based on household income and energy costs. The federal Low Income Home Energy Assistance Program (LIHEAP) can also provide one-time assistance with energy bills during periods of financial hardship.

Customers who believe they may qualify for either program should contact their utility directly or visit the NJBPU's website for current eligibility information and application guidance. Specific income thresholds and benefit amounts are subject to change and are best confirmed through those official channels rather than third-party sources.

Basic Generation Service is not a trap or a penalty. It is a reliable default that protects New Jersey customers from going without supply, and in some utility territories right now, it is actually the better deal. JCP&L customers have little reason to shop at current rates. PSE&G and Atlantic City Electric customers, on the other hand, have a real opportunity to lower their supply costs with a well-chosen fixed-rate contract.

The key habit is checking rates at least once a year, around June when the new BGS rates take effect, and comparing them honestly against what competitive suppliers are offering. The BGS rate is always the benchmark. Everything else should beat it on price, or at minimum offer something else of value, before a switch makes sense.