Western Price Survey / Archives
January 28, 2000
A short, sharp jab to California Power Exchange market clearing prices midweek turned out to be just a temporary event. Bid prices for Thursday peak-period deliveries jumped to 43 mills/KWh from the 32 mills to 33 mills/KWh level during previous days.
While traders speculated as to the cause-rejecting an uptick in natural gas prices or transmission constraints as the full explanation-the opinion from one trading group seemed to answer the puzzle with a riddle: "Why did the PX price jump? Because it can."
Actually, one unreported market event-in combination with other factors-may help explain the temporary spike. A 740 MW unit at Moss Landing dropped off-line Wednesday, possibly pulling a critical power bid out of the normal CalPX queue and allowing a higher priced resource to set the daily price schedule, or giving other bidders a reason to jack up their offers. Duke Power reports the unit is expected back to service on Friday.
Prices did not wait that long to stabilize, and the Friday delivery price deflated to 32.8 mills as loads dropped to the 500 GWh mark for the day. Thursday's day-of market prices did not match the 56 mills/KWh price peak recorded for a few hours on the day-ahead market, and import prices were generally depressed by transmission constraints on the California/Oregon Intertie.
All in all, the broader market impacts of the PX spike were summed up in this way: None at all.
The survey of spot pricing across the West showed almost no variation through the week except for usual erosion to the Friday/Saturday package deals. Mid-Columbia peak power drifted to the 24.75 mills to 26 mills/KWh, with off-peak slipping to 22 mills to 22.5 mills/KWh. The California/Oregon Border price slipped from 30.5 mills to 29 mills, with overnights dropping to 22 mills/KWh.
In the Southwest, Palo Verde prices narrowed to 28.5 mills to 29.5 mills, and Four Corners deals spread just a bit wider from 27 mills to 28.5 mills/KWh. Off-peak energy was reported at 19 mills, but the California market was more profitable. "Everything's going into the PX," one desert scheduler reported.
The exodus of energy to better prices really did not affect utilities' ability to meet load; there was little demand in the region because of continued warm weather in the Southwest. Utilities reported generally flat load curves throughout the West.
The only other resource news of note was that 750 MW Four Corners Unit No. 4 stumbled on its restart sequence, but 225 MW Unit No. 2 was reported back in service.
Transmission line work held the California/Oregon Intertie to 3900 MW southbound on January 27. The line is going to be held to 4000 MW through February 4 [Arthur O'Donnell].
Operational Restrictions Signal Shift in Gas Market Direction
Institution of an operational flow order (OFO) on the Pacific Gas & Electric gas transmission system sent supply prices downward Thursday after most hubs were experiencing uplift on the winter-coattails of Eastern seaboard snow storms. "Prices collapsed," said one harried trader, who also noted the fact that NYMEX benchmarks also lost steam once the big storm had dissipated but then picked up again on late Thursday activity. "It's been pretty volatile," sighed one buyer.
Loss of a big power generator in Central California appeared to strand a large amount of gas on the pipeline, forcing shippers to closely balance their nominations and takeout in light of the high inventory OFO.
Prices at Malin, for instance, moved up to $2.53/MMBtu midweek but fell rapidly to $2.40. The Alberta price was buffeted by several pressures, including a cold front in the Northwest, the ebb and flow of demand from the Midwest and pipeline constraints into California. As a result, the Alberta price tracked a wide range this week, from a low of $(C)2.88/Gigajoule to as much as $3.06/Gj-finally ending up at $2.91/GJ on Friday morning.
Southwestern basins and border prices also varied widely. The Southern California Border cracked $2.61 before falling to $2.50/MMBtu. Permian and San Juan Basin prices also moved higher only to fall to the low- to-mid 2.40s. Permian was experiencing a premium above San Juan of about $0.05 to $0.08/MMBtu for much of the week, because of demand from the Central US [A. O'D.].
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