Western Price Survey / Archives
March 16, 2001
Though it seemed that California had finally begun to stabilize its supply/demand balance, the scales tipped over Thursday morning when hydroelectric imports from the Pacific Northwest nearly evaporated, pushing the California Independent System Operator directly into a Stage Two Emergency. By late afternoon, Cal-ISO resorted to asking Southern California Edison to effect customer curtailments.
So far, the alert has not extended into Friday.
The situation was triggered by Bonneville Power Administration's decision to cease extra generation at Columbia River dams it had been making while releasing extra water to meet fish-flow protocols required by the biological opinion. Instead, BPA on Thursday said it needed to allow reservoirs to refill and it stopped selling the 600 MW to 1,000 MW per hour of excess power it had been sending to the California Department of Water Resources. A BPA spokesperson said the sales had been occurring for the past eight days, but were on an "hour by hour" basis. "We were warning California all the time that it could end any time and now it has ended," said Mike Hensen at BPA.
When Cal-ISO called the alert, it said there was about 1,600 MW less coming from the Northwest than on Tuesday, indicating that other sellers were also pulling back. British Columbia's PowerEx had previously said it was buying rather than selling and that little power appeared to be flowing into California.
The situation boosted power prices at Mid-Columbia and the California/Oregon Border Thursday after a couple of listless days of slight activity and flat prices. Traders said Mid-C, COB and NP15 all seemed to converge in the 230 mills to 250 mills/KWh range, essentially regain ground that had been given up since Monday's starting point.
Southern points, which had been drifting well below the 200 mills/KWh mark, popped back up to the line as buyers scurried around to make up for the import losses. "People are looking for power anywhere," one trader said Thursday.
Palo Verde had been as low as 150 mills/KWh midweek but rose with the tides, pulling Four Corners and SP15 along with it. The resulting price curve for the week was like a cup-one that was not running over with excess hydropower, however.
Cal-ISO's list of power generation outages shrank and grew during the week, with between 10,000 MW and 11,100 MW out of commission for various reasons. The Southwestern market seemed to be especially missing Four Corners No. 4's 355 MW. In Southern California more than 1,000 MW of Los Alamitos power was offline this week, and planned maintenance at Encina No. 5 cut 331 MW [Arthur O'Donnell].
Gas Prices Keep Sliding
California gas prices maintained their downward trend that began last week, and because they had so much further to fall than national benchmarks it appeared to be a rather steep slide. Traders, however, suggested it was really a return to normalcy as the Southern California Border price finally dropped below $10/MMBtu for most of the week and basin prices fell below $5/MMBtu.
After starting the week at about $12.25/MMBtu, Topock prices slid to $9.25/MMBtu Thursday. Warm weather and a reduction in power generation demand at the start of the week helped ease demand and allowed for continued storage injections.
San Juan and Permian Basin prices did a little up and down dance, moving in a range between $4.80 and $5.00/MMBtu.
The SF CityGate was actually a bit higher than Topock late in the week at $9.50/MMBtu but Malin eroded to $6/MMBtu.
Trends might change next week, if the dearth of hydroelectricity put more pressure on gas-fired generation in the West and if expected pipeline constraints into Northern California causes concern among industrial shippers.
Thin trading out of Alberta made for some price volatility as the price bounced around the $(C)7.00/Gigajoule mark early in the week. But the AECO index dropped to $6.85/Gj to close out Thursday [A. O'D.].
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