Western Price Survey / Archives
March 3, 2000
Western prices neither rose as far as some expected based on hot natural gas markets, nor did they fall much because of additional hydroelectric flows in the rain-soaked Northwest and Northern California. While it is possible that the two factors canceled each other out, traders were more likely to attribute low loads as the real market driver this week.
Prices bumped up a bit midweek on the start of a new month but, by Thursday's trading, tended to sink back to where they started out.
The biggest changes came in the Pacific Northwest, where peak power at Mid-Columbia that had been trading for 24 mills and 25 mills/KWh jumped to the 27.5 mills to 28 mills/KWh range on Wednesday, then slipped back a bit. That increased the spread between day and night, as off-peak prices remained in the 24 mills to 25 mills/KWh vicinity.
Bonneville Power Administration's surplus power offers stayed flat across all hours at 28 mills for Northwest deliveries and 29 mills/KWh to the California/Oregon Border (or the California Power Exchange prices for Northwest zones, if higher).
Overnight prices are still relatively high, and many prospective buyers said it seemed sellers were holding back their water in storage to capture the small spread between day and night. "We're not really awash in water," a Northern California utility trader said. "Storms have been intermittent and haven't forced us into bypassing or spilling. That gives us discretion in when to sell."
The California/Oregon Border price rose a bit more gradually, from 28.5 mills early in the week to 30.5 mills/KWh midweek but stepped back to 29 mills for the Friday/Saturday sales packages. Off-peak at the border pretty much matched the Mid-C price.
The California Power Exchange stated at about 31.2 mills position for peak power until Thursday, when it began slipping to the 29.6 mills/KWh mark set for Friday. Off-peak energy ranged between 22.7 mills and 25 mills/KWh this week.
Palo Verde prices tracked the Power Exchange at 29 mills to 31 mills for peak power with little activity noted for off-peak periods. Off- peak energy dropped to 20 mills to 21 mills/KWh in the Southwest.
Sellers competed to send their excess supplies into California, causing temporary bottlenecks on the AZ3 transmission path. This zonal congestion pushed bid prices down to 25 mills for peak hours and to as low as 19 mills for off-peak deliveries midweek, but later things reverted to the average market clearing price.
The Navajo Unit No. 3 tripped on a motor problem Wednesday, but the outage was short-lived. A San Juan plant out for repairs over the weekend reported back to service on Tuesday. There was a minor blip in Palo Verde No. 1's output to 99 percent of capacity Wednesday morning, and again on Friday morning. The only other outages of note were for plants following early maintenance schedules.
Even the Alberta Power Pool was remarkably stable all week, with bid prices in a relatively tight 33 mills to 41.29 mills/KWh range [Arthur O'Donnell].
Gas Prices Scream Higher
Natural gas traders hung onto the seats this week as prices at most Western hubs jumped as much as $0.30/MMBtu from the start of the week. High basin prices in the Southwest cut into the Southern California Border price margin, making transport of supplies uneconomic, one trader said. Similarly, the high cost of Alberta fuel made it too expensive to ship into California, and buyers looked to Rocky Mountain and Northwest hubs for gas. Inventory reports on the Canada-to-US pipelines indicated low take-outs, probably because of the high costs.
Alberta's index saw great volatility, spiking to as much as $3.80/Gigajoule at one point from the $3.17/Gj mark where the week began. When the trend shifted, though, Alberta "gave it up pretty quickly" and by the end of trading Thursday, the AECO index had settled somewhat to $3.50/Gj, traders said.
"I've never been in the money and out of the money so many times in one morning," a shell-shocked trader reported.
National NYMEX benchmarks were part of the driving force, as was a perception that gas storage levels were too low for the season. Although the Western storage situation is healthier than the average, that did not prevent regional hubs from feeling the price pressure.
In addition, maintenance work at the San Juan Basin kept as much as 250 MMBtu off market until Thursday. That pushed San Juan prices into the same bracket as Permian Basin supplies, and both ran as high as $2.65/MMBtu before edging down to $2.60 or so when flows returned.
With the SoCal Border prices only $0.10/MMBtu higher than basin prices, the thin spreads were giving shippers pause. "I don't think there's a lot of flowing supplies," a trader said.
People's pricing patterns are also shifting since the introduction of Enron's on-line trading board; it remains to be seen how suppliers will position themselves around the multitude of indexes now available [A. O'D.].
Archives of the Western Price Survey for the past year are also available online.
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