Western Price Survey / Archives
February 16, 2001
Most of the action in Western energy markets was compressed into the first three days of trading, as schedulers bundled their purchases with the upcoming Presidents' Day weekend in mind. But it was no holiday for grid managers, as the California Independent System Operator extended its Stage Three Emergency into the 32nd day Friday.
Cal-ISO has been hanging on to the top level of alert as a way to keep emergency supplies flowing and conservation on the minds of energy users. A court injunction issued last week maintained deliveries from several reluctant in-state generators and emergency dispatch orders- OOM calls-kept a fairly high level of imports flowing, up to $35 million worth Thursday, despite a tight resource situation in the Pacific Northwest.
Aside from the continuing dearth of excess hydroelectricity, two Centralia units were reported out this week, pulling some 1,500 MW out of the queue. Bonneville Power Administration reported running more water through its dams than its salmon preservation protocols might otherwise allow. Though it downplayed the long-term effects of its actions, fish advocates are increasingly worried that more hydro today means fewer fish tomorrow.
Big storms in California brought rain and snow to unlikely places, but also helped build needed snowpack in the Sierra watersheds. On Friday morning, Western Washington woke to half a foot of snow.
The pricing trend was a steep climb, followed by a half-step downward. Cold weather and another spate of unplanned unit outages in California and the Southwest helped drive prices up to as much as 500 mills/KWh at all regional hubs. Even Palo Verde joined in the peak price parade, although its off-peak levels were markedly lower than other locations.
As traders put together their Saturday/Sunday blocks on Thursday, it appeared that California/Oregon Border and Mid-Columbia prices had slipped to 350 mills/KWh and Palo Verde was moving down to 290 mills/KWh.
The volatile market resulted in a broad range of prices for the week. Traders do not expect much relief next week. "As long as gas prices stay high, we expect prices above 300," one scheduler said.
Each day, Cal-ISO has been listing units that are unavailable. Where last week's spotlight was on Northern California units, this week unplanned outages at Huntington Beach, Ormond Beach, Redondo and Mandalay, as well as the temporary loss of five combustion turbines at Long Beach were among the notable additions to the list. The Mandalay outage raised a small tiff between owner Reliant Energy and Southern California Edison about who was responsible for the problem-mainly Cal-ISO was worried because its been skating on thin ice all month and another 265 MW loss just about put it over the edge.
However, interruptible customers in California continue to provide a margin of safety, even though regulators have essentially suspended the programs. Pacific Gas & Electric made a special note of praising its curtailment customers who came through again this week.
Next week, the outage of the week will be at Palo Verde No. 3, which is being taken out of service for about two weeks so operators can replace a cracked coolant pump shaft [Arthur O'Donnell].
Basins Immune to Topock Spike
There was lots of price volatility in natural gas markets this week, but it all centered at the Southern California Border, where prices briefly spiked to $45/MMBtu before dropping to $22/MMBtu for the weekend.
The reason, according to traders was the unusual cold weather in Los Angeles and San Diego that brought higher demand from consumers and big draws from storage. Utility San Diego gas & Electric enacted another round of delivery curtailments to industrial customers and at least one power generator on Tuesday.
SDG&E's sister utility SoCal Gas imposed strict balancing requirements on shippers to control storage withdrawals. The market was reportedly "shocked" by the intolerance and responded by bidding Topock delivery prices to stratospheric levels.
Basin prices moved a lot, but in a relatively limited range. Permian Basin dropped at the start of the week to $5.65/MMBtu, then rose to $5.93 before settling at $5.51/MMBtu. San Juan followed the trend from a distance of about a nickel behind Permian.
Northern California is still on edge, waiting to see how Pacific Gas & Electric manages its finances to pay suppliers. Malin rose to $12/MMBtu but ended at $8.75 to $9/MMBtu. CityGate closed the week in the $11 to $11.75/MMBtu range, down from $13/MMBtu.
The Alberta hub price rose to $(c)8.55/Gigajoule midweek, but fell to about $7.73/Gj by Friday morning [A. O'D.].
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