Extreme cold weather in early January 2014 provided a stress test for Mid-Atlantic and Northeastern wholesale electricity market designs. Following this unusual polar vortex weather event several important concerns were identified for review and modification.1 Many of these concerns are appropriately associated with ensuring that independent system operators (“ISOs”) have the ability to effectively manage electricity operations during periods when system conditions may be stressed. In addition, the recent cold weather events revealed several electricity spot market2 pricing inefficiencies which can negatively impact operations and reliability. The polar vortex provides an important opportunity to highlight existing wholesale electric spot market energy pricing inefficiencies, and to embrace future market design policy that will eliminate these problems.
