Western Price Survey / Archives
March 18, 2005
The California Energy Commission recently issued its "Summer 2005 Electricity Supply and Demand Outlook Staff Draft Report," reiterating the concerns of state regulators and analysts for the summer 2005 demand-supply balance in California. It is the outlook for Southern California that may provide grid operators with nail-biting sessions this summer, particularly if there is an extended hot spell. According to the CEC, the region south of Path 26 will have an 8.9 percent reserve margin in September, in a normal-temperature year. If it is especially hot that month, the CEC estimates the region will need 1,791 MW of power to maintain a 7 percent reserve margin.
Contingencies such as forced outages at generating facilities and transmission-line congestion--events that are almost guaranteed to occur, albeit with an unpredictable degree of severity--have not been factored into the CEC's forecast.
Despite Washington State's drought emergency called last week, CEC power-supply forecasters do not seem worried about reduced Northwest imports this summer. The Bonneville Power Administration estimates the Northwest will have a surplus of 7,952 MW in July. According to the CEC, approximately 4,000 MW of imported power will be brought into California from the Northwest this summer.
There is currently more than enough electricity to keep the lights on, particularly now that San Onofre Nuclear Generating Station Unit No. 2 is back in service. The peak load recorded within California Independent System Operator territory this week hovered at about 30,000 MW each day.
In light of the water shortage in the Northwest, electricity prices at Mid-Columbia remain higher than normal as power managers rely on natural gas-fired facilities to make up for a reduction in hydropower output in the region. Mid-C peak power drew between 49 mills and 51.50 mills/KWh at the beginning of the week. By the end of the week, power at the Northwest delivery point nearly matched Southern California power costs, hitting a high of 57 mills/KWh on Thursday. Off-peak power prices in the Northwest region were the highest in the West this week, topping out at 52 mills/KWh on Friday.
California-Oregon border prices matched Mid-C prices for off-peak power and COB daytime power ran between 52.75 mills and 56 mills during the week.
There was little difference in the price of power between Northern and Southern California this week. Power costs in both regions reached their zenith on Friday, with NP15 peak-time power trading for as much as 59 mills/KWh, while SP15 power attracted 59.50 mills/KWh that day. Off-peak power prices treaded water just above the 40 mills/KWh level much of the week. The price in both regions of the state made a run up to between 48 mills and 49.25 mills for deliveries scheduled for early next week.
Palo Verde power opened the week in the range of 50.75 mills to 51.25 mills/KWh. The price reached 57 mills/KWh on Friday. Off-peak power costs at the hub ranged from a low of 35.50 mills/KWh on Monday up to 40 mills/KWh at midweek before gaining even more ground in Friday dealings, hitting 47.25 mills/KWh that day [Shauna O'Donnell].
Gas Records Gains on Oil Upswell
With the price of oil soaring up to a record high of $56.46 per barrel this week, natural gas costs followed suit, staying above the $6 mark throughout the country. In fact, Western gas prices trended toward the lower end of the scale, with much of the East Coast and Midwest ensconced in the $7 range.
Still aside from the upswell in the price of crude oil and uncertainty about the overall direction of that market, few fundamentals such as storage quantities, weather or demand figures leaned on Western gas prices this week.
Permian Basin gas opened the week trading for between $6.10 and $6.26/MMBtu. Tuesday brought higher prices throughout the region and Permian recorded a high of $6.70/MMBtu that day. San Juan gas lagged behind by about a dime this week.
PG&E CityGate gas exceeded the $7 level on Tuesday and hovered around the $7.25/MMBtu mark the rest of the week. Southern California border gas topped out at $6.86/MMBtu late in the week after opening on Monday in the range of $6.25 to $6.45/MMBtu [S. O'D.].
Archives of the Western Price Survey for the past year are also available online.
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