Western Price Survey / Archives
January 5, 2001
Even though its volumes are diminishing almost daily, prices on the California Power Exchange remained in the 250 mills to 300 mills/KWh range after the market got back to work Tuesday. Those clearing prices were about double the transaction prices at adjacent hubs this week, leading some to speculate that suppliers are exacting a premium from California's hard-pressed utilities, given the increasing possibility that Pacific Gas & Electric and Southern California Edison might well run out of cash. The fear expressed by some is that the long settlement process for paying off energy bills through the Power Exchange and Independent System Operator could mean their payments get frozen by a bankruptcy court.
Traders said they were still bidding into the Power Exchange because it is the best place to move excess energy. But they did so warily.
With at least one big utility acting on the recent federal order saying it does not have to schedule generation and load through the CalPX, volumes at peak have dropped by about 10,000 MW. The thinner market seemed to add to price volatility, as the daytime clearing price wobbled unsteadily in a range from 286 mills to 331 mills/KWh beginning Tuesday, ending out at 306 mills/KWh for Friday.
Off-peak prices were moving upward to a high of 265 mills/KWh but trailed off at 254 mills/KWh for Friday deliveries.
Prices for the Monday New Year's holiday were nearly flat and averaged 217 mills/KWh for the day.
In contrast, regional hubs reported definite softening of prices. Both the California/Oregon Border and Mid-Columbia prices drifted to the 142 mills to 155 mills/KWh level at peak, with off-peak not far behind at 140 mills/KWh. Although the Northwest is still expressing concerns about long-term hydroelectricity because of a poor precipitation forecast, there was enough extra in the system to allow Bonneville Power Administration to return to the market this week. The daily surplus offer was between 100 MW and 200 MW at prices tied to the Dow Jones Mid-C index, or CalPX's NW1 zonal price. No deliveries into Nevada were available from BPA.
Warm weather in the Southwest brought significant erosion to prices. After starting out at about 150 mills, Palo Verde slipped to the 120 mills to 123 mills/KWh range, while Four Corners moved down from 135 mills to 115 mills/KWh. Off-peak was much lower at 70 mills to 80 mills/KWh in the Southwest.
Increased trade activity brought the Mead Marketplace to life at 132 mills/KWh for peak and 80 mills/KWh for off-peak deliveries.
In generation news, San Onofre No. 3 finally unplugged for a six-week refueling outage after drifting down in output for the past two weeks. The only forced outage reported was at Los Alamitos, which had returned to service during emergency situations. Cal-ISO did not need to call a Stage One, Two or Three emergency this week, but it did rely on federal authority to squeeze supplies from a reluctant marketplace. The system has been in "no touch" mode consistently [Arthur O'Donnell].
Basis Narrows as Border Prices Fall
Western natural gas prices bucked the national trend by steadily dropping this week. The good news for buyers was the delivery prices at the Southern California Border and PG&E CityGate seemed to fall faster and farther than basin prices, easing the wide spread that has caused such consternation among regulators and shippers. Whether the situation continues remains to be seen, but generally moderate weather in the West helped bring some sanity to the fuel market.
That was not necessarily the case nationally, where severe weather pushed prices higher early in the week and NYMEX is still trading at historic highs. The storage situation is also a worry, with higher than expected withdrawals this week pulling reserves down to about 70 percent of last year's storage.
In sunny Southern California, though, the Topock price fell well below the start of month contract price, and daily spot figures slipped from $14/MMBtu to the $10 to 11.25/MMBtu range Thursday. Permian Basin and San Juan Basin prices dropped below $10/MMBtu, settling between $9 and $9.25/MMBtu.
The same was true for Malin, closing at $9.50/MMBtu and the CityGate, which ranged from $9.85 to $10.15/MMBtu. The market appears calmer than last week, when utility PG&E announced some suppliers were refusing to extend credit for its gas purchases.
Alberta prices eased from $13/Gigajoule to less than $11.20/Gj Friday [A. O'D.].
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