Northeast Energy Markets: Windfall or Washout?

Fortnightly Magazine - January 1 2000
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Weighing the outlook for new plant investment in gas-fired power and related infrastructure.

The jury is still out on the type and size of additional energy infrastructure desirable in the Northeast United States, but enough data is in to make a few guarded observations.

The situation is fluid. Last June, the Federal Energy Regulatory Commission held a one-day public inquiry into anticipated demand for natural gas in the Northeast United States, eliciting a mixed bag of predictions.[Fn.1] In fact, just a few months before, FERC Commissioner William Massey had expressed confusion with a move by the Maritimes & Northeast Pipeline to downscale its capacity by 20 percent, calling it "counterintuitive."[Fn.2] But then again in late 1998, the FERC had asked the New England Power Pool to file a new plan on transmission access and grid constraints, on finding it unlikely that all new generation projects proposed for the region would actually be built.[Fn.3]

Nevertheless, despite the lack of institutions for a well-integrated power market in the Northeastern United States, the power industry is forging ahead with ambitious plans for new natural gas power generation there.[Fn.4] In this same region, the industry is pushing to build natural gas infrastructure that would serve all sectors on par with corresponding markets in most other parts of the lower-48 states, despite enormous regulatory and political hurdles.[Fn.5]

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