Western Price Survey / Archives
February 22, 2002
Though it seemed that electricity prices might be moving up midweek on higher natural gas prices, whatever market momentum was building died Thursday on diminished expectations. Gas prices collapsed in the wake of slim storage withdrawals and overly filled pipelines. Forecasts of colder temperatures to the north were more than offset by predictions of warmer weather in the south. And through it all, the amount of available generation more than made up for outages and peak period loads.
Not that the peak demand was much of a hurdle, with the California Independent System Operator logging less than 31,000 MW of peak demand each day this week. Unit outages in the state averaged 13,500 MW per day, more heavily concentrated in Southern California.
Even the absence of the 1,100 MW Columbia Generating Station in the Northwest was not much of a factor- although the outage appeared to pull Bonneville Power Administration out of the sales business all week. The nuclear facility came off line last week for inspection and repairs to circuit breakers; operators said that restart might begin as soon as Friday with the unit back to full capacity by the start of next week.
A scattering of outages among Southwestern and mountain region coal projects seemed to be putting natural gas on the margin in many hours, but no one reported any real supply pressures.
A Colstrip unit was reported out over the weekend, as well as a Craig unit in Idaho. Four Corners No. 4 had an unexpected tube leak and boiler repair outage that put it out of commission briefly-it is now reported back at half capacity, but that adds 360 MW to the 750 MW outage at Unit No. 5, which will last through most of March.
In California, most of the outages were the same as last week, with the addition of a 240 MW curtailment at Department of Water Resources's Hyatt Thermalito plant and a 724 MW unplanned outage at Ormond Beach No. 1.
The price curves were less bell-shaped than squiggles within a fairly tight range from 21 mills to 27.5 mills/KWh across the region. Mid-Columbia took the low end in the 21 mills to 23 mills/KWh bracket. California/Oregon Border prices roamed from 22.75 mills to 24 mills/KWh. NP15 and SP15 moved in tandem from 25 mills to 27.5 mills, then down to 26 mills/KWh. Overnight power remained in the 18.5 mills to 20 mills/KWh range at all these points.
Palo Verde had reached a peak of 25.5 mills on Wednesday but dropped to 22.25/KWh for Friday/Saturday deliveries. Off-peak energy was sold for 17.5 mills/KWh on a prescheduled basis in the desert, but some real-time energy was as cheap as 14 mills/KWh. Four Corners and Mead were slightly higher, reflecting some unit outages and riding on the coat-tails of higher Southern California prices.
The Alberta Power Pool exhibited sporadic flings of daytime price spikes up to 60 mills/KWh followed by drops to 10 mills/KWh. Loads were not especially high, about 7,200 MW, but the pool operators reported a lot of transmission line problems through the week [Arthur O'Donnell].
Gas Hikes Meet Resistance
Natural gas prices spread broadly across the West this week, but the peaks seen on Wednesday soon gave way. "It just collapsed," said one trader watching Thursday's screen take a dive. The $0.25 to $0.30/MMBtu increases that were logged as sellers capitalized on cold weather forecasts became $0.20 to $0.25/MMBtu give backs in late trading.
Northern markets were impacted by a zero tolerance operational flow order on the PGT pipeline system that was imposed because of high inventories. The OFO pretty much quelled new takeouts from production basins, and shippers had to use up their pipeline reservations or face stiff penalties. Once again, there was a back flow of supplies into storage that offset whatever withdrawals were scheduled. In the West, only a net 8 Bcf was reportedly taken out of storage, leaving a healthy 59 percent of capacity still in the ground.
The same story was told nationally, with a total 112 Bcf of withdrawals reported by the American Gas Association. bout 1.94 Tcf remains in storage and traders are seeing only a few weeks of potential winter weather left on the calendar. The drop in NYMEX prices from $2.50 to $2.35/MMBtu late on Wednesday was attributed to the AGA bearish report.
From a starting point of $2.05, San Juan and Permian Basin prices shot over $2.30/MMBtu midweek, only to fall back to their lows in some late trades. The SoCal Border/Topock followed the same trend but in a range from $2.19 to $2.45/MMBtu before resting at $2.23/MMBtu.
Malin traced the curve from $2.10 to $2.32, then slipped to $2.27/MMBtu. The PG&E CityGate had reached as high as $2.54, then collapsed below $2.30/MMBtu.
In Alberta, the range was $2.91/Gigajoule to $3.20/Gj [A. O'D.].
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