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Western Price Survey / Archives

February 4, 2000
Traders Puzzled by Power Market Price Inelasticity

Neither rain, nor gas spikes, nor lack of demand-or even nuclear power cutbacks-seemed to have much of an impact on Western energy prices this week. By and large, power prices at major hubs and the California Power Exchange stuck within fairly narrow ranges, despite what might be considered significant market disruptions.

On Monday, traders awoke to an announcement by Pacific Gas & Electric that both units at Diablo Canyon nuclear station had been limited to just 13 percent of output because incoming storms posed the threat of huge ocean swells. When waves are high, PG&E explained, kelp and debris can clog the cooling water intake systems, so the utility made the "safe and conservative decision" to limit output to about 150 MW per unit, reported plant spokesperson Jeff Lewis. The limits lasted a day for Unit No. 2; which was reported back to full service by Tuesday morning. Unit No. 1 lagged a bit, sticking at 61 percent until restoring full output by Wednesday.

The announcement appeared to boost prices at the California/Oregon Border to 35.5 mills/KWh but that was not far out of line with the 34 mills to 34.7 mills prices being set by the California Power Exchange.

Even after the units were back, CalPX wobbled between 33 mills and 34.4 mills/KWh, signaling that the Diablo outages were not much of a factor, possibly because of low loads on the exchange. COB dropped to weekend levels of 29 mills/KWh.

Neither, apparently, was a report that the 2,074 MW Colstrip had tripped off-line. Owner/operator PP&L Montana declined to confirm any "minor outages" but the Reuters News Service had reported the plant was off Monday. In any event, Northwest prices were unfazed- sticking in the 27.5 mills to 30 mills/KWh range all week. By the end of the week, the Mid-Columbia price was trailing off to 26 mills for Friday/Saturday deliveries.

Bonneville Power Administration kept its surplus postings at 29 mills to 30 mills/KWh for peak and 26 mills to 26.5 75 mills/KWh for off- peak power (subject to variations on the CalPX Northwest indicies).

The mystery of the marketplace is why off-peak power is so high, especially given the drenching that Northern California and the Northwest have taken in recent weeks.

"Our best guess is that, for some reason, natural gas is on the margin during off-peak," one trader said. Compared to the low 21 mills and 22 mills/KWh prices for overnight power at Palo Verde and Four Corners, the California market at 26 mills to 28 mills/KWh seemed to offer premiums, even with congestion eroding the price. "We love the prices, but we're concerned they could tank any minute," a Southwest seller said.

Northwest parties denied withholding hydro at night to capture higher prices in the daytime market, but that remained a speculation for many [Arthur O'Donnell].

Gas Flaps Around Like a Windsock

Natural gas markets were blown by the winds of constant change this week, although most of the movement was attributed to volatility on the NYMEX screen rather than any fundamental market events. Prices at major hubs rose as much as $0.22/MMBtu before retreating to a middle- ground position. Wednesday afternoon saw the highest peaks, driven by NYMEX traders' perceptions of tight supplies and growing demand in Eastern and Midwestern markets.

Asking for the current Western price on Thursday was just a matter of timing. "High early, low late," was the assessment of one trader, who recounted prices at $2.80, $2.68 and $2.72-all for the Southern California Border at different hours of the day.

Similarly, the San Juan Basin moved between $2.59 and $2.48, and the Permian price edged a bit higher in the $2.54 to $2.62/MMBtu range.

The Alberta index also covered a huge terrain, starting the week at $(C)2.98/Gigajoule and rising to as much as $3.17/Gj before settling at $3.05/Gj at the close Thursday [A. O'D.].

Western Electricity Prices
Week of January 31-February 4, 2000
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 36-70 mills/KWh 21-35 mills
California PX (WAC) 33-34.7 mills 26-28
Mid-Columbia 26-30 21-22.75
COB 29-35.5 25-28
Palo Verde 30-32 21-22

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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Contact Shauna O'Donnell, editor with questions regarding Price Survey Content.

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