Western Price Survey / Archives
February 23, 2001
For the first time in about 40 days, the California Independent System Operator did not declare any stage of emergency, citing improved generation availability and lower loads. The return to normal operations began last Friday night, February 16, when Cal-ISO terminated its extended Stage Three after 32 consecutive days at the highest level of emergency.
Stage Two persisted for a few days, but Thursday and Friday saw only a "warning" notice on the grid operator's Web site. Emergency dispatch power purchases ended Wednesday after diminishing over the three-day holiday weekend.
Cal-ISO was still making purchases in the imbalance energy market, however, as the Department of Water Resources was reportedly still selectively buying power to make up utilities' "net short" positions.
Prices at bilateral hubs across the region moved down as pressures eased. Uncertainty and anxiety had prevailed at the end of last week when schedulers had to do advance transactions to cover the Presidents' Day holiday, bringing peak prices up to around 300 mills/KWh at most locations.
The high water mark dropped steadily once traders returned to action, and by the end of the week prices were reported in the 190 mills to 200 mills/KWh range in Northern California and the Pacific Northwest.
Palo Verde and SP 15 points were even lower at 175 mills/KWh for the Friday/Saturday package.
Off-peak power was down to 150 mills to 165 mills/KWh at NP 15 and COB, and as low as 95 mills to 100 mills/KWh in the Southwest.
A series of fairly substantial rainstorms rolled across California, bringing relief to worried water managers and snow pack and stream flows into major reservoirs increased. Some translated into additional power generation, but most will be saved for a not-rainy day in the future. "We're getting water and I'm sure we'll save it for summer," one municipal utility trader said.
Aside from the previously announced shutdown of Palo Verde No. 3 to inspect and repair a possible crack in a coolant pump shaft, there were no major unplanned outages reported. Cal-ISO still had a list of more than 50 units out for scheduled or forced outages, but few large units were added this week.
Over the weekend, the market learned that San Onofre No. 3 will be out of service for as long as four months. The February 3 electrical fire also caused substantial damage to turbine equipment because lubricant pumps shut down while the turbine was still spinning.
In a report to the US Securities and Exchange Commission on February 16, owner Southern California Edison revealed that the extent of damage was quite serious and that the unit will not be operational until at least mid-May and possibly not until mid-June [Arthur O'Donnell].
Gas Prices Pause and Reflect
Southern California gas prices took a steep slide this week, as moderating weather and a lessening of the crisis mentality helped put traders' minds at ease. Still, the prices coming into Topock were the highest in the nation and showed a huge premium over the prices at the basins where the delivered gas originated.
Most other locations followed the national trend of easing prices based on reduced storage withdrawals. Northern California is still not out of the woods, in terms of Pacific Gas & Electric's vulnerability to suppliers demanding payment assurances, but pressures lessened as more sellers accepted guarantees based on utility accounts receivables.
After starting the week in the $24.50 to $25/MMBtu range, SoCal Border prices fell to $17 to $18/MMBtu heading into the weekend.
Both San Juan and Permian Basins traded in the lower-$5/MMBtu ranges, ending out the week at $5.08 to $5.14/MMBtu-not all that much different than the national NYMEX benchmarks.
Malin slipped from the $10 price seen early in the week to the $8 to $9/MMBtu range and the PG&E CityGate dropped from $12 to $10/MMBtu.
Alberta took small steps downward each day. After starting the week at $(C)7.70/Gigajoule, the Alberta hub index closed at $7.17/Gj [A. O'D.].
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