Polar Vortexes in New England: Missing Money, Missing Markets, or Missing Regulation?

The 2014 and 2017-18 “polar vortex” events in New England served as virtual controlled experiments on how competitive natural gas and electricity markets coexist uneasily almost two decades after different kinds of regulatory restructuring initiatives freed different kinds of competitive forces to support the supply infrastructure in each energy market. As a region with no indigenous fossil fuels that relies on interstate pipelines to feed its fast-growing fleet of competitive combined-cycle natural gas turbine (CCGT) generation plants, New England shows where the interface of regulation and competition in those two different energy markets fails to serve the region’s energy consumers in the face of a predictably recurring weather patterns. We chart the polar vortex problems in New England, describe the energy markets that supply the region, describe how each market deals with the risk of committing capital to serve a region with such extreme weather patterns and explain the institutional problem that makes useful solutions difficult.