Western Price Survey
Febuary 3, 2006
The Nuclear Regulatory Commission provided the Arizona Corporation Commission with an update and insight into safety issues at the Palo Verde Nuclear Generating Station.
"There are significant issues and [Palo Verde] is taking actions to correct them," Bruce Mallett, regional administrator of the NRC, told the ACC in a January 26 meeting in Phoenix.
"This does not mean the operation is unsafe," Mallett said.
Palo Verde started 2004 in the green category, the top level for NRC rankings.
The NRC, however, decided that events in 2004 and 2005 warranted special inspections, he explained. They included a tube leak in unit 2 in February 2004, the operator's response to loss of offsite power in June of that year and problems voiding the emergency core cooling system at all three units in August.
In October of the following year, a potential design issue was found in the emergency core cooling system at all three units.
Then, technicians looked into reduced power because of "high pipe vibrations" in Unit No. 1 in December 2005.
Earlier in the year, however, the NRC cited Palo Verde for two violations, one of which resulted in a $50,000 civil penalty. As a result, the federal agency downgraded the three Palo Verde units from the top green category to yellow, a drop of two notches.
"In other words, it had safety significance," explained Victor Dricks, an NRC spokesperson. "They are receiving additional regulatory oversight as a result."
The three Palo Verde units remain in the yellow column, and they are the only nuclear units in that category.
NRC counts 80 generating stations in the top green category and 17 one step down at white. Units No. 1 and No. 2 at the Point Beach plant in Milwaukee, Wisconsin, and a unit at Perry in Ohio are in red, a step lower than yellow. But no nuclear plants are categorized as unsafe.
An ACC official said the meeting with the NRC was "nothing really remarkable." While NRC officials said some Palo Verde issues were operational, others were caused by vendors. NRC cited examples of good management and noted problems are more common in older plants.
The price of peak power at Palo Verde opened the week trading for between 52 mills and 60 mills/KWh. After tacking on about 4 mills in Tuesday's session, the cost of PV peak power settled at between 58 mills and 61.75 mills/KWh on Wednesday before shedding another 7 to 10 mills in late-week trading. Low-demand power values hovered in the mid- to upper 40s much of the week before losing steam and dropping to between 38.50 mills and 41.75 mills/KWh for weekend deliveries. The price perked back up on Friday for packages to be delivered early next week, closing at a high of 49.50 mills/KWh.
At the start of the week, peak-time power in the South of Path 15 region changed hands for between 57 mills and 63 mills/KWh. The price moved upward during the Tuesday and Wednesday trading sessions, but slipped on Thursday, landing close to the 53 mills/KWh mark. The SP15 price of low-demand power peaked at 50 mills/KWh on Monday before settling in a range of 43.75 mills to 47 mills/KWh at midweek. Weekend packages moved for between 41 mills and 42.75 mills/KWh on Thursday, and off-peak power closed out the week at a high of 50.25 mills/KWh.
The San Onofre Nuclear Generating Station Unit No. 1 remains on a planned refueling outage in the southland, though the unavailability of the 1,122 MW unit has exerted little pressure on the price of power. At this time of the year, with the California Independent System Operator recording system load close to 30,000 MW, the need for the extra power is nil.
In Northern California the price of daytime power topped out at 65 mills/KWh on Tuesday, though it spent much of the week closer to 60 mills/KWh. With little but Super Bowl Sunday to spur electricity consumption this weekend, the price of peak power north of Path 15 dropped to between 51.50 mills and 54.75 mills/KWh on Thursday. Nighttime power changed hands at NP15 for as much as 50 mills/KWh on Monday, matching the high set at SP15 that day. Weekend packages of off-peak power moved for close to 10 mills less, but regained that amount on Friday.
Mid-Columbia peak power attracted as much as 54 mills/KWh this week. Off-peak power at the Northwest delivery point traded for nearly as much as peak power, hitting 48.50 mills/KWh in Tuesday's session. The price lost ground as the week wore on, settling between 37 mills and 40 mills/KWh on Thursday.
In other news, Governor Arnold Schwarzenegger has nominated Joe Desmond to serve a full term as California Energy Commission chair. Desmond has served in that role since last May following the resignation of former chair William Keese.
The January 27 appointment did not go unnoticed by some members of the state Legislature. Desmond's nomination must be confirmed by the Senate and Democratic leaders are said to be less-than-keen about appointee's position on moving toward a market-based electricity system. With the pain of the Western electricity crisis of 2000 and 2001 still a dull throb on the state's economic and regulatory regimes, politicians are wary of anything that smacks of a return to the market structures instituted by AB 1890.
Chair of the Senate Rules Committee and Senate President Pro Tem Don Perata (D-Oakland) has reportedly told the governor that Desmond will not be confirmed.
Desmond served as deputy secretary of energy at the California Resources Agency prior to his appointment to the CEC last year [Shauna O'Donnell and John Edwards].
Gas Price Floor Sloping Downward
A report that Punxsutawney Phil saw his shadow this Thursday and predicted six more weeks of winter was good news to natural gas traders and marketers. Colder weather would put upward pressure on the price of gas, which has swooned some under the influence of mild weather and lackluster demand.
Even the recent storage report by the Energy Information Administration, reporting a withdrawal of 88 Bcf of natural gas last week, did nothing to boost prices. This was because even a sizeable reduction in stored gas supplies left 2,406 Bcf of gas underground--28 percent more than the five-year average figure of 1,877 Bcf.
Futures prices on the New York Mercantile Exchange for March gas sagged on the hefty storage numbers, moving as low as $8.17/MMBtu in Thursday's transactions. Market watchers anticipate a drop below the $8 mark unless lower temperatures buoy consumption in the coming weeks.
Southern California deliveries of natural gas moved into the state at Topock for a low of $6.74/MMBtu on Thursday, down by nearly $1 from the previous day. This pattern was repeated at the Northern California receipt point of Malin. After opening on Monday trading for between $7.25 and $7.35/MMBtu, spot gas at Malin flowed for a high of $7.70/MMBtu on Wednesday. The next day the price dropped to between $6.80 and $6.87/MMBtu [S. O'D.].
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