Western Price Survey / Archives
April 2, 2004
Just before 2 pm on Monday, March 29, the California Independent System Operator declared a Stage 1 emergency that lasted until 8 o'clock that evening. Record temperatures throughout the southern portion of the state were the primary cause for escalating power usage that day. Demand in Cal-ISO territory quickly surpassed scheduled load, and by 1 pm load was running at 32,053 MW, more than 1,700 MW above what had been estimated for that time of day.
Loss of generation in the SP15 delivery zone exacerbated the difficulty of providing adequate power to the region. On Monday morning the total for unscheduled outages in the SP15 zone was 1,686 MW. With two Long Beach units and a Redondo Generating Station unit tripping off line near the noon hour, SP15 lost another 648 MW, and that was enough to create the emergency situation. The fact that the San Onofre Nuclear Generating Station's No. 2 unit continued off line did not help matters.
The high demand drove the price of power for both incremental and decremental energy bids in the Cal-ISO's real-time markets at many delivery points in Southern California, up to $150/MWh between noon and 4 pm. At SP15, Cal-ISO was required to purchase a fair amount of energy to keep the electricity system in balance. Monday's heat wave rapidly subsided, and the emergency conditions were not repeating in subsequent days.
The price for spot power were not moved much by Monday's events, as trading at Western hubs continued with hardly a blip during the first part of this week. Mid-Columbia power kept to its customary place at the low end of the power-price scale. Peak power at that hub opened on Monday between 34.75 mills and 36.25 mills/KWh before clawing its way up by just 1 mill on Tuesday and Wednesday. Off-peak deliveries at Mid-C stayed between 29.50 mills and 31.50 mills.
The steady condition of prices shifted on Thursday, when all Western hubs recorded a boost in spot prices. Much of the rise could be attributed to power prices catching up with spot natural-gas costs, which were on an upward trajectory all week.
Mid-C peak-power prices skipped up to the 40 mills/KWh mark while low-demand power traded for between 30.50 mills and 34 mills/KWh that day.
On Monday, the price for peak power at the California-Oregon Border ran between 38.50 mills and 39 mills/KWh. Packages for off-peak deliveries at COB faded over the first three days of the week, starting out between 32 mills and 32.75 mills/KWh, only to sink to between 29.75 mills and 31.50 mills/KWh on Wednesday. By the end of the week, the price for peak power at COB had moved up to between 40.50 mills and 43.50 mills/KWh, with off-peak power attracting as much as 36 mills/KWh.
California power prices showed no ill effects from the system's visit to the emergency room. SP15 peak-power prices ranged between 45.50 mills and 48.50 mills/KWh over the first three days of the week before running up to a high of 51.50 mills/KWh for Friday delivery. Low-demand packages changed hands for between 31.50 mills and 33.25 mills/KWh on Monday, but slipped to between 27.75 mills and 30 mills/KWh on Wednesday. Traders looking for off-peak power for end-of-week delivery encountered prices in the 29 mills to 36 mills/KWh range.
NP15 trading ran a little lower than SP15 prices, but kept to the same slim margins in the first half of the week. Opening Monday between 41.25 mills and 42.50 mills/KWh, NP15 peak-power packages moved for between 42 mills and 42.75 mills/KWh on Wednesday. On Thursday, power packages at the hub drew between 43 mills and 47 mills/KWh [Shauna O'Donnell].
Gas Prices Swell
In contrast to their behavior of the last few weeks, natural gas prices took a turn upward this week. As the week progressed, prices at the producing basins and major hubs throughout the West climbed higher. There were no major events or significant market activity to account for the jump, though some market watchers said the rise could be both an indicator of an improving economy as well as responsive to more robust activity in the manufacturing sector.
At the Southern California Border, trading drew prices in the high $4.80/MMBtu range on Monday, quickly topping $5.00/MMBtu the following day. By the end of the week, gas at the hub was moving for between $5.35 and $5.50/MMBtu.
At the other end of the state, prices were trailing behind but rose apace. Malin gas prices surged from $4.64/MMBtu to slightly more than $530/MMBtu over the course of the week.
AECO gas also exceeded the $5.00 mark this week. On Monday, natural gas at the Canadian hub was changing hands for about $4.45/MMBtu. Climbing steadily throughout the week, the price closed out the week at $5.05/MMBtu [S. O'D.].
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