Western Price Survey / Archives
March 23, 2001
Markets were already primed for something to happen last week, but things turned out far worse than imagined as California plunged into two days of forced power cuts March 19 and 20. Sensing a growing list of generation maintenance repairs and warmer-than-average weather forecasts, power traders had pushed prescheduled prices for Monday up to the 400 mills/KWh level at Mid-Columbia and the California/Oregon Border.
After a transformer fire knocked out both 790 MW units of the Mohave generating station Monday morning, however, prices climbed another 100 mills to 125 mills/KWh at Mid-C and COB. Palo Verde prices joined the pack at up to 525 mills/KWh on Tuesday-a much bigger jump since they had started out at about 250 mills/KWh.
The power market was kind of a free-for-all, as buyers scrambled for any available energy but found little. Transactions were so scarce that there was almost no spot trade volume passing over the Pacific Intertie, except for exchange energy and returns. During the emergency, Bonneville Power Administration continued its two-for-one exchanges with California only as long as it was assured returns within a day. On Monday, BPA sent 1,050 MWh across the Intertie and had scheduled 1,100 MWh for Tuesday but cut it off after 150 MWh when California could not guarantee return energy under the agreement. Another 100 MWh was sent during Wednesday.
Otherwise, BPA said it was acting as a broker for the California state agency, buying power in the Northwest from parties unwilling to take a chance they will not get paid and reselling it to the Department of Water Resources-but it does not intend to continue the practice. "We're getting out of the middle man business," said BPA spokesperson Mike Hansen.
Even as the California emergency settled Wednesday, traders noted a huge range of prices but scant liquidity. Things were a bit more solid on Thursday and except for COB, there was at least enough trading information to establish some price parameters heading into the weekend.
Mid-C followed a downward trend in the 330 mills to 360 mills/KWh range for peak power but off-peak appeared on the upswing from 210 mills to 255 mills/KWh. COB was so light that marketers only ventured to guess it was within 5 mills above or below Mid-C.
NP15 varied between 270 mills and 290 mills/KWh for peak and 170 mills to 185 mills/KWh for off-peak. Both SP15 and Palo Verde sank to the 220 mills to 250 mills/KWh vicinity. SP15 off-peak was between 145 mills and 160 mills, but PV light load fell to the 120 mills to 140 mills/KWh range.
Over on the Cal-ISO's imbalance energy markets, daily as-bid purchases jumped to $406/MWh on Monday, although a healthy amount of volume was bought at the $150/MWh cap price as well. Out-of-market calls raised over 91,000 MWh at $378/MWh on Monday and 88,600 MWh at $436/MWh on Tuesday. During the two days of Stage Three outages, the daily OOM requirement ran between $35 million and $38.5 million, according to Cal-ISO.
While some of the major units that had precipitated the crisis were returned to service midweek, including Mohave and partial restoration of Ormand Beach, there was still 12,000 MW of planned and unplanned repair outages late in the week.
A few important resources are scheduled to join the list next week. Chief among them is Palo Verde No. 1, which is already coasting down towards a refueling outage set to start March 30. Plant output is expected to slip one percent per day for the next week. Also scheduled for maintenance are San Juan No. 2 and Mohave No. 2. Four Corners No. 4 remains in its unplanned outage through April 8 [Arthur O'Donnell].
Gas Takes a Holiday
If anything, the electricity emergency in California this week was responsible for depressing natural gas prices, traders said. The huge list of power generators off line for repairs or for economic reasons quelled fuel demand and caused an extended high inventory OFO on the Pacific Gas & Electric pipeline system early in the week.
Once the emergency ended, prices began to rise a bit in Northern hubs. Malin and the SF CityGate popped from the $6/MMBtu level to $7 to $7.50/MMBtu Thursday.
Another factor was the dearth of trading. Many marketers were in Houston for the annual GasMart conference and more than a few trading operations had wrapped up the week's business well in advance to get to the party.
Southern California Border prices took a counter trend, rising somewhat through the whole week, then slipping. From a start point of $9.75/MMBtu Monday, Topock rose to about $11.25 midweek, then settled out at $10.50 to $11/MMBtu.
Extremely light demand along the El Paso system pushed San Juan prices from $4.85 down to $4.60 while Permian supplies tracked a bit higher. The Texas gas started near $5 but fell to $4.76/MMBtu.
In Alberta, index gas climbed from $(c)7.19 to $7.39/Gigajoule, but gave back some to close at about $7.20/Gj [A. O'D.].
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