Western Price Survey
Week's End Edition
The continued outage at the San Onofre Nuclear Generating Station is posing increasing operational challenges for the California Independent System Operator.
Cal-ISO is "getting more squeezed at San Onofre" as transmission outages occur in "tighter and tighter windows," said Steve Berberich, CEO of the grid operator, at a Feb. 7 meeting. Recent outages included three 500 kV transmission lines that went out of service Jan. 11.
"Some of the operational challenges we've had give us a preview of where things are headed," Berberich said. This summer the agency plans to rely on transmission-system upgrades, synchronous condensers and new generation, as well as demand response and energy efficiency.
"The situation without San Onofre will remain fragile," Berberich said.
Meanwhile, working gas in storage reached 2,684 Bcf as of Friday, Feb. 1, according to U.S. Energy Information Administration estimates, a net decrease of 118 Bcf from the previous week. Storage levels are now 7.8 percent less than a year ago and 15 percent above the five-year average.
This withdrawal was less than market expectations, according to Barclays analysts, and marked the "second consecutive week that market participants have expected a tighter market signal from storage changes than the EIA's report has indicated," the firm said in a research note.
Enerfax, in a Feb. 8 report, echoed these observations. "With the coldest months of the year soon ending, storage levels are likely to end the heating season near the highest levels on record, which could mean further price declines," the report noted.
Barclays analysts reduced their storage estimate to 1.9 Tcf by the end of March, based on slightly colder weather in January and longer-than-expected production freeze-offs. They add that "production should return to November levels as winter weather subsides" in March and April. They also expect weaker hydro generation on a year-to-year basis once spring arrives.
Maurice Roos, chief hydrologist with the California Department of Water Resources, says it's too early to determine what spring runoff might look like. The state Feb. 1 snowpack survey shows snowpack is about 90 percent of average with near-average runoff. "It has been pretty dry so far in February, and this morning's snow sensor report came in with 81 percent of today's average," Roos said. He added, "There is still a large range of outcomes depending how much rain and snow fall during the rest of the rainy season."
Here's how average peak-power prices at Western hubs fared since last Friday:
Off-peak power prices on Feb. 8 ranged from $28.90/MWh at Mid-C to $36/MWh at NP15.
Henry Hub natural gas values dropped about 8 cents since Feb. 1, trading Feb. 8 at $3.26/MMBtu. Western prices moved nominally, with Malin gas up 5 cents to $3.43/MMBtu and Southern California Border gas up 2 cents at $3.53/MMBtu Feb. 8 [Linda Dailey Paulson].
* Prices represent both day-ahead locational marginal prices (financial swaps, or EZ Gen DA LMPs) and quasi-swap prices (EZ Gen) as reported by ICE.
Archives of the Western Price Survey for the past year are also available online.
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