Western Price Survey / Archives
January 4, 2002
Energy demand remained low to moderate and the big drop in natural gas prices helped pull electricity costs down throughout the West as 2002 got off to a start. Traders grudgingly returned to normal patterns after two weeks of dealing in holiday packages.
There was little by way of news to affect pricing. "Loads are light, it's wet but mild," reported one trader. "Everyone is geared up for winter but it's not happening."
Peak loads on the California Independent System Operator's charts crept above 31,100 MW on Thursday but were expected to fall to 30,000 MW Friday. Some 12,000 MW of units were reported out for various reasons, but there was plenty of capacity to go around. Early in the week Navajo No. 3 tripped off line as did San Juan No. 1. Among larger units reported in unplanned curtailments were 442 MW at Mohave No. 2 and 400 MW of Calpine's 555 MW Los Medanos power plant.
Hydroelectricity is not yet flowing freely, despite all the wet weather of recent weeks. Water managers seem to be concentrating on filling reservoirs while they can collect the heavy river inflows. Early indications are that precipitation and snow pack will be better than normal (see story below), but no one is willing to take any chances at this point. Besides, with prices so low, there seems little reason to sell into a surplus market even though prices could come down even farther with the spring runoff..
Bonneville Power Administration was offering up to 100 MW of daytime clock energy for Northwest delivery or sales into California and Nevada at prevailing prices. BPA stayed out of the off-peak market.
After starting the year in the mid- to upper 20s, power prices slid by about 5 mills across the board. Mid-Columbia took the bottom rung at 18.5 mills to 19 mills for peak power and 16 mills to 18 mills/KWh for off-peak by the time traders were putting together Friday/Saturday deals. The California/Oregon Border peak price fell to 21 mills, while NP15 and SP15 were in the 23.5 mills to 25 mills/KWh range. Off-peak power in California was pegged at 19 mills/KWh. In the Southwest, Palo Verde dropped from a high of 29 mills to the 22.5 mills to 24 mills/KWh range. Off-peak power was bargain priced at 16 mills to 17.25 mills/KWh. Though daytime energy at Four Corners and Mead were in the same vicinity, the Nevada off-peak price was up to 19.5 mills while the Four Corners price slid to 15 mills/KWh [Arthur O'Donnell].
Withdrawals Cannot Stem Price Drops
Despite the first triple-digit report of storage takeout this week, gas prices on daily and forward markets dropped by $0.20 to $0.30/MMBtu across the nation. The American Gas Association delayed its weekly storage report by a day because of the New Year's holiday, but even with 124 Bcf taken out o wells nationally, the market sensed an oversupply situation. "There's not much demand," was the market assessment this week.
Prices ticked upward on Monday's trading as people closed out 2001 with relief. Perhaps there was just a shred of nostalgia for the record-breaking prices set one year ago-at least by sellers. However, the new month brought a two step decline at hubs across the West.
San Juan Basin supplies slid to $2.19/MMBtu while Permian basin gas fell to $2.22/MMBtu. he SoCal Border/Topock rate had been as high as $2.70 but plunged to $2.30/MMBtu on Thursday, following the NYMEX screen lower.
Malin was heading south of $2.30 and the San Francisco CityGate price fell by $0.40/MMBtu from its high point of the week, ending out at $2.30/MMBtu.
Alberta was also weak, ending out at $(C) 3.30/Gigajoule [A. O'D.].
Hydro Projections Looking Up
In stark contrast to weather patterns of one year ago, the winter of 2001/02 promises to be a wet one. Already California has experienced its highest levels of December precipitation since 1955 and Pacific Northwest water managers are reporting rainfall at 127 percent of normal for the past month.
After a somewhat dryer than average November-at least above The Dalles on the lower Columbia River-the Bonneville Power Administration is cautiously declaring precipitation at 105 percent of average for the water year that began October 1.
So far, stream flows remain at just 70 percent of average, as measured at The Dalles, but the actual cumulative runoff has already hit 58.2 million acre- feet. That is on track to reach or exceed the 106 million af normally recorded in the January-to-July runoff period.
Last year at this time, forecasters were alarmed by runoff projections of just 75 percent. Spring 2001 precipitation fluctuated greatly, but snow pack averaged merely 55 percent to 60 percent of normal, contributing to the Western energy crisis and severely reduced hydro generation in the Northwest.
Federal NW reservoirs are currently at about 51 percent of capacity but filling with each new storm. Milder than normal temperatures over the past two months have not left a lot of snow in the hills yet, but the overall picture appears to be tracking normal levels, according to the most recent projections from the Northwest River Forecast Center. Inflows at Bonneville Dam were well above 100,000 cubic feet per second in the last week of December.
The California Department of Water Resources is reporting similarly wet news, with its latest snow surveys showing strong potential runoff in the form of "snow-water equivalents" at 149 percent of normal for the date, as of January 2 in key Northern California watersheds. On a statewide basis, DWR reported 136 percent of normal, which would be 60 percent of the April 1 average.
April 1 is usually the date of peak snow pack in the state. According to DWR spokesperson Jeff Cohen, an average accumulation from now until April will translate to 120 percent of normal.
The recent rains are also helping to quickly fill reservoirs that supply the flows for California hydroelectric generation. For instance, water levels at Lake Shasta are already 68 percent of capacity, with the last reported inflows measuring 56,705 cubic feet per second. Folsom Dam, which had been seriously depleted is up to 46 percent of full, while New Melones reservoir is at 63 percent. Reservoirs are filling at a rate about three times above average for December.
Utilities and other power generators have become more secretive about their expectations for hydroelectric generation in a competitive marketplace, but the early indications are that hydro power will be abundant this spring-certainly compared to last year.
Bonneville Power Administration has been slowly returning toward average levels of generation after stingily balancing low production against fish flow requirements. In the latest figures available, generation at federal hydro facilities in the Northwest reached 7,105 GWh in November, about 90 percent of the average produced in that month over the past five years. During the prior quarter, generation averaged just 65 percent of average [A. O'D.].
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