Western Price Survey / Archives
February 27, 2004
The major storm that rushed through Central and Northern California on Wednesday managed to force the curtailment of two nuclear-generating units this week. Diablo Canyon No. 1, which Tuesday had already ramped down to 80 percent of its 1,100 MW output, and No. 2 were taken down to 24 percent because of large ocean swells brought near shore by the storm. Diablo Canyon owner Pacific Gas & Electric said both units would stay at that level through Friday morning. Operators will then determine whether to start the units on the climb back to full output. The initial curtailment of Unit No. 1 on Tuesday was attributed to an increase in the water temperature that cools the generator on the non-nuclear side of the facility.
Wednesday's derate at Diablo brought the number of nuclear units either off line or curtailed to four. San Onofre Nuclear Generating Station No. 2 is off line for refueling, and the Palo Verde No. 2 unit in Arizona was taken off line last Friday because of a tube leak. Columbia Generating Station in Washington and the other SONGS and Palo Verde units continued to operate at 100 percent.
In other storm news, about 115,000 PG&E customers lost power on February 25, while utility crews worked assiduously to get the power restored. Gusting winds and driving rain knocked down power poles and whipped tree branches into electric lines.
Power prices seemed no worse for wear given the disruptions in supply and transmission brought on by the storm. Since peak loads in California Independent System Operator territory hovered close to the 30,000 MW level throughout the week, there was a fairly large margin between supply and load.
Margins were slim in Palo Verde trading. Opening the week between 41 mills and 42 mills/KWh, peak-power prices at the hub slipped to between 39.75 mills and 41.95 mills/KWh in Thursday trading before gaining a bit of ground on Friday. It was all off-peak prices could do to stay above 30 mills/KWh, and they finally succumbed in some trading midweek, dropping down to 29.50 mills/KWh. Still, the price perked up to 36 mills/KWh on Thursday for some deals done for weekend delivery.
In the Northwest, the spreads were not much better and prices lagged behind Southwest trades. Mid-Columbia power was moving for between 39 mills and 41 mills/KWh at the start of the week, before dipping down to between 38 mills and 40 mills/KWh on Thursday. Relatively speaking, off-peak power prices at the hub dropped more significantly during the first three days of the week. After opening on Monday between 36.25 mills and 38 mills/KWh, low-demand power was moving for a high of 33.50 on Wednesday. The following day, the commodity had found its legs again and was trading for up to 39.75 mills/KWh.
In the California markets, the pattern remained the same--early-week deals drew a couple of mills more than end-of-week trades. At SP15, off-peak supply was going for between 31.50 mills and 32.25 mills/KWh on Thursday, a drop of close to 5 mills/KWh from Monday's levels. Peak power managed to simmer in the 43 mills to 46 mills/KWh range most of the week before closing on Friday at 47 mills/KWh. NP15 high-demand deals ran a little lower, changing hands for between 41.75 mills and 45 mills/KWh.
On the transmission side of the system, this week brought a number of derates, but nothing especially out of the norm. According to the Western Electricity Coordinating Council, the California-Oregon Intertie was limited to 4,400 MW north to south and 3,675 MW south to north because the Hanford-John Day 500 KV No. 1 line was out for scheduled work. The Pacific DC Intertie also was derated to accommodate work on the line. In the north-to-south direction the line was rated at 1,086 MW capacity and 1,070 MW in the opposite direction.
In addition to the nuclear-station outages and curtailments, a number of other units were listed by Cal-ISO as being off line. Following last week's pattern, most of the units disconnected from the grid were on planned outage. Both the 231 MW La Paloma No. 3 unit and the 527 MW Sutter facility were not running all week [Shauna O'Donnell].
Gas Prices Slip Down then Slide Up
Spot natural gas prices in the Western waned much of this week before gaining in end-of-week trading. Prices in the West reached their nadir mid-week--San Juan Basin gas traded for between $4.51 and $4.59/MMBtu, while Topock deliveries ran in the $4.66 to $4.71/MMBtu range. The Southern California hub price started the week at between $4.80 and $4.87/MMBtu and then closed the week on an upswell, reaching a high of $5.05/MMBtu. The price of Malin gas also ticked upward at the end of the week. After hitting a low of $4.59/MMBtu on Wednesday, deliveries at the hub were moving for a high of $4.94/MMBtu.
The cost of gas on the spot market was likely influenced by activity in the futures markets. After the Energy Information Administration released its storage figures on Thursday, the NYMEX April futures price climbed by $0.17. Last week's withdrawal of 164 Bcf from storage dropped the amount underground to 1,267 Bcf, or 11 percent below the five-year average [S O'D.].
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