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Polar Vortex Post Mortem

July 22, 2014 By Linda Hardesty

Conedison SolutionsElectricity suppliers are still analyzing the 2013-2014 winter ‘Polar Vortex’ in the Northeast US, which caused energy prices to spike.

According to a white paper issued by ConEdison Solutions, the most-powerful contributors to the high prices were pipeline constraints that elevated the cost of transporting natural gas to electric generators in the Northeast and Mid-Atlantic. In addition, spikes in demand exacerbated the impact. At one point in January, spot gas prices, which are a main driver of electricity prices, at a New England transmission connection reached 878 percent higher than the 12-month average.

Customers who had locked in to “true” fixed-price contracts experienced no impact to their unit price, says ConEdison Solutions. In contrast, users who had purchased variable, market-based products, saw major increases in their bills last winter.

In addition, a few suppliers, having failed to purchase product beforehand in a way that would allow them to sustain the fixed prices they had offered, went out of business when record-setting wintertime costs took hold, leaving their customers to seek utility default service at market prices.

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