It is well established that terrestrial weather events can have a major impact on electricity markets. For example, hotter than usual weather in early August of 2001 contributed to an increase in the wholesale price of electricity in the New York power grid from its norm of approximately $40 per megawatt-hour to over $900. It is less well known that the electricity market is also affected by space weather. Forbes and St. Cyr (2003) found evidence that the market price on the PJM power grid is affected by space weather events. This paper examines whether these impacts are also present in the New York power grid.

This paper examines the economic impact of space weather by drawing on hourly load and price data from the New York power grid over the period 1:00 am January 1, 2000 through midnight December 31, 2000. It is hypothesized that the real-time price of electricity is affected by several factors: expected supply and demand, unexpected demand (attributable in part to unexpected terrestrial weather events), transmission constraints that are terrestrial in origin, unexpected generation outages, and space weather. Using multivariate regression analysis, the contribution of each of these factors can be isolated. The paper will use the parameter estimates to assess the economic cost of space weather.