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Western Price Survey

January 27, 2006
Palo Verde Problems May Push Down Earnings for Plant Owners

Prospects for bringing one of three units at the Palo Verde nuclear generating station up to full output have not brightened since operators at the facility took the power plant off line last week to repair a problem with vibrating pipes. The No. 1 unit at the Palo Verde plant remains at 26 percent of its 1,243 MW total output. Arizona Public Service, which operates the three-unit facility for a consortium of owners, said the unit is likely to remain at that level for a number of weeks.

The price of spot power in the Southwest has not been greatly affected by the problems at Palo Verde, as this is the off-peak season for electricity demand in the region. Peak-time power at the hub attracted between 53.50 mills and 62.25 mills/KWh this week, bottoming out on Thursday when trading was conducted for weekend deliveries. Off-peak power moved for between 42 mills and 44 mills/KWh on Monday before skipping up to a high of 55.50 mills/KWh on Friday.

Still, owners of the Palo Verde facility are beginning to get a bit anxious about the status of Unit No. 1 and its effect on the bottom line. As El Paso Electric, which owns close to 16 percent of Palo Verde, warned in a January 16 news release, "If Palo Verde Unit No. 1 continues to operate at a reduced capacity beyond the first quarter, the adverse financial impact on EPE could increase and would include increased purchased power and other costs."

Other Palo Verde owners that could also be forced to rely on purchased power to replace the nuclear unit's generation include APS, Salt River Project, Southern California Edison, PNM, the Southern California Public Power Authority and the Los Angeles Department of Water & Power.

California day-ahead power prices stayed a few mills above the levels recorded at Palo Verde this week. Peak power costs in South of Path 15 territory ran a mill or two higher than North of Path 15 prices this week, with SP15 topping out at 66.25 mills/KWh and NP15 hitting a high of 66 mills/KWh. SP15 daytime deliveries traded for a low of 55 mills/KWh on Thursday, and NP15 trailed at 54.50 mills/KWh.

Low-demand costs at SP15 reached 56.75 mills/KWh on Friday, a jump of about 6 mills over the price the previous day. Off-peak power prices sat comfortably in the high forties at NP15 much of the week. Friday's transactions for packages to be delivered early next week saw the price move up to a high of 56.50 mills/KWh.

Northwest peak-power prices this week ranged from a low of 48 mills/KWh at the Mid-Columbia trading post to a high of 62.50 mills/KWh at the California-Oregon border.

COB daytime deliveries attracted between 50 mills and 51.50 mills/KWh for weekend supplies on Thursday, but edged back up to between 54.50 mills and 56 mills/KWh in Friday's session. Off-peak power at COB opened the week at a low of 47 mills/KWh on Monday but closed out the week at a high of 55.75 mills/KWh.

Mid-C peak-time power bottomed out at 48 mills/KWh on Thursday before rallying on Friday to end the week trading for between 51.75 mills and 54 mills/KWh [Shauna O'Donnell].

Gas Values Slip into Familiar Territory

Natural gas prices continued their downward trend this week, and the commodity moved through many Western delivery points for less than $7/MMBtu. Gas flowing through the Southern California border location at Topock bottomed out at $6.68/MMBtu this week, nearly $1 lower than last week's low-end price. The high end at Topock was recorded on Monday, when gas moved for between $7.28 and $7.57/MMBtu.

Inland at the PG&E CityGate hub, gas supplies traded for as much as $7.86/MMBtu this week. Though the CityGate price never dipped below $7, it threatened to do so on Thursday, when spot costs ranged from $7.02 to $7.13/MMBtu.

Natural gas values at the producing basins of Permian and San Juan opened the week in the low $7 range--Permian reached a high of $7.285 on Monday and San Juan gas went for as much as $7.24/MMBtu that day. By midweek the price weakened enough that gas at both basins traded in the high $6 range.

Thursday saw Permian gas changing hands for between $6.40 and $6.50 mills/KWh, while San Juan gas attracted a low of $6.35/MMBtu that same day [S. O'D.].

Western Electricity Prices
January 23 - 27, 2006
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 47.49-623.59 35.46-202.97
Mid-Columbia 48-59 44-53
COB 50-62.50 47-55.75
NP 15 54.50-66 45.25-56.50
SP 15 55-66.25 45.25-56.75
Palo Verde 53.50-62.25 42-55.50

Archives of the Western Price Survey for the past year are also available online.

The Western Price Survey is excerpted from Energy NewsData's comprehensive regional news services. See for yourself how NewsData reporters put events in an accurate and meaningful context -- request a sample of either or both California Energy Markets and Clearing Up.

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