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Western Price Survey / Archives

March 22, 2002
Cold Weather and Gas, Not Market Rumors Spur Price Rise

Mid-Columbia and California/Oregon Border power prices popped up above 40/KWh for Friday/Saturday deliveries in a repeat of last week's unusual market activity. This time, however, there were no underlying rumors of nuclear outages driving the prices-just concerns about frigid weather and reduced water flows.

On Friday morning, Palo Verde prices for Monday did something similar-jumping to 48.75 mills in early trading but then slipping to 37 mills/KWh. In that instance, a big jump in natural gas prices was cited as the cause.

Market observers are still buzzing about alleged rumor mongering of a forced outage related to last week's maintenance derating at the Columbia Generating Station that seems to contribute to a boost in Mid-C prices to 60 mills/KWh over the weekend. The 15 percent curtailment that lasted from Saturday to Monday was planned well in advance and was much less serious than some traders were trying to convince gullible buyers.

"I wish I could start a rumor like that," joked one power seller who benefited from the short-term run up in prices.

This week's increase was based on more substantive forecasts of temperatures well-below normal and a sense that water managers are being stingy with reservoir releases. Bonneville Power Administration cuts its daily offering to 50 MW in daytime-only periods for the weekend.

The perception that off-peak power might be scarce drove Mid-C overnight prices up to 41 mills/KWh in Thursday's trading. California hubs rose to the mid-30s for off-peak energy.

There was a lesser increase in the Southwest, with less of a solid foundation for the bump. There are a number of large coal plants off line for repairs, but that was not news. The spring maintenance list included Four Corners No. 5 (745 MW); Intermountain Power No. 2 (850 MW); and the Palo Verde No. 2 nuke (1,120 MW), which is on refueling hiatus.

The California outage list, running about 13,000 MW each day, was mainly comprised of usual suspect planned outages and a few small qualifying facilities, and the big unit outage in the Northwest was at Centralia (630 MW).

The price charts for the week were somewhat like an inverted bell curve-higher on the ends with a trough midweek. The ranges seen across the West were from 34 mills to 47 mills/KWh for peak power and 29 mills to 41 mills/KWh for off-peak. However, the higher prices at the tail end of the week were already eroding, so few expect the 40 mills market to sustain through Monday-barring some unforeseen circumstance.

The Alberta Power Pool had such an experience midweek, as a transmission lien outage in the Fort McMurray area caused cascading outages at local generators and sent the pool's clearing price spiking to 676 mills/KWh in the late afternoon. Even though the units were back in service Thursday, the market still appeared skittish and subject to gyrations into the 160 mills/KWh vicinity [Arthur O'Donnell].

Like a Rubber Ball, Gas Prices Bounce Around

Although cold weather and extra-regional demand for Canadian supplies helped pull Western natural gas prices to their highest levels in months, traders were already detecting price erosion heading into the weekend. No one was placing bets on a sustained trend, however. "just wait 20 minutes and the price will change again," noted one scheduler. "There's a lot of volatility within the day." That proved true on Friday morning, as advance trading for next week showed NYMEX benchmarks floating above $3/50/MMBtu. Pulled by a cold blast across the midsection of the continent, Alberta gas approached the $(C)5.00/Gigajoule level on Thursday before backing down slightly. At that price, it was uneconomical to transport Canadian gas into California, where it would translate to a $3.40/MMBtu delivered price at the San Francisco CityGate. The CityGate price almost reached that high, but slipped to $3.26/MMBtu, while Malin dropped from a high of $3.44 to $3.18/MMbtu heading into the weekend. Part of the price decrease late in the week was the reaction to a low inventory withdrawal report. The American Gas Association said just 50 Bcf was pulled from the ground last week, and the NYMEX April contract prices dropped almost immediately. Still, it remained above $3.10/MMBtu as did the daily Topock price, which settled from a high of $3.40 to $3.13/MMBtu. The Southwestern basin prices had been moving in lockstep. Both San Juan and Permian prices dropped below $3/MMBtu late in the week [A. O'D.].

Western Electricity Prices
Week of March 18-22, 2002
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 61-676 41-63
Mid-Columbia 34-44 32-41
COB 34.5-44 30-35
NP 15 35-47.5 29.75-35
SP 15 34.75-46 29.25-34
Palo Verde 37-47.5 27.5-33.5

Archives of the Western Price Survey for the past year are also available online.


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