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Western Price Survey / Archives

April 5, 2002
Wide Swings Seen in Power Prices

Western power prices were nearly as varied as spring weather patterns this week. That is saying a lot given that California desert temperatures were above 100 degrees F on the same days that Montana farmers were waking to frost and winds at minus-14 degrees. In between those extremes were above average temperatures in the Sierra mountains that unleashed the beginnings of the spring snowmelt and runoff.

The trend was unpredictable, with prices falling substantially at the start of the week, rising for two straight days, then falling again to their lows in advance of the weekend. Some of the cause was a similar fluctuation in natural gas prices, but there was evidence of buying miscalculations.

With many traders taking Monday off to attend the Western Systems Power Pool meeting in Vail, Colorado, volumes were slim and marked by a "dumping" of excess energy. Prices dropped by about 10 mills/KWh through the course of the day, with Northwest prices falling into the mid-20s and California/Southwest prices scraping 30 mills/KWh at peak. Off-peak power in the Southwest plummeted to 13 mills to 16 mills/KWh.

On Tuesday, the direction reversed and prices stepped up to the mid-30s, continuing to rise to the upper 30s to slightly above 40 mills/KWh at Palo Verde for Thursday deliveries, with off-peak rising to the 21 mills to 22 mills/KWh range. Then came another switch, and the Friday/Saturday packages dropped to 31 mills to 33 mills/KWh for daytime power and 23 mills to 25 mills/KWh for overnights. "I can't think of any hub that didn't fall," remarked one trader.

Within a few short weeks, power markets can expect to be flooded with low cost hydroelectricity. Even though the Pacific Northwest is still wary of its water projections, given the latest assessment of a just- below-average water year, traders are anticipating that water power soon will displace natural gas as the marginal resource. "Each day we get more and more flow," said one California utility scheduler. A trader from the Northwest added that runoff "is starting to pick up the pace with a few hot days under out belts."

Though stream flows above The Dalles have picked up to 77 percent of average, federal storage capacity began April at only 30 percent of capacity. BPA pulled out of the sales market midweek through Monday, after having 200 MW blocks of peak period power available and 100 MW of off-peak energy for sale at market prices earlier in the week.

Power plant outages tracked by the California Independent System Operator jumped from 12,000 MW on Monday to 13,800 MW Wednesday. Much of that was for planned maintenance. Two big 750 MW units out at Ormond Beach helped swell the list as did Pacific Gas & Electric's unplanned outage at its 404 MW Helms pumped storage midweek. Helm was reported back on the job Thursday, but the dams at Lake Shasta were still down by nearly half to 250 MW.

The 740 MW Four Corners No. 5 was initially reported coming back into service Tuesday, but operator Arizona Public Service later said restart will be delayed until sometime between April 11 and 15. Additional turbine repairs appear to be the cause for the late start. The Four Corners unit had been out for nearly a month [Arthur O'Donnell].

Gas trends Prove Fleeting

Natural gas prices were every bit as unpredictable as electricity prices, this week. "One day, you're looking good, the next you're not," said one seller. "Just wait around, it will change."

And change it did, rising to midweek highs of $3.65/MMBtu at the Southern California Border, before falling back to the $3.40/MMBtu mark on Thursday.

The Canadian price index was even more volatile, as bitter cold weather in the upper Midwest drew Alberta prices above the $(C)5.00/Gigajoule mark and sucked supplies out of pipelines heading to British Columbia and California. Then a turn-around Thursday saw the AECO price fall to $4.50/Gj and pipelines got full again. Some maintenance on the PGT pipe at Station 11 and along the Redwood Path cut some deliveries, but there was ample storage to draw upon.

Actually, the West showed a net injection into storage this week, although the national scene was still in withdrawal mode. The American Gas Association said 65 Bcf was pulled nationally, while 1 Bcf net went back into the ground in Western reservoirs. PG&E storage was building by 250 MMcfd to 300 MMcfd this week and independent storage was also on the rise. "Getting ready for summer," was how one trader put it [A. O'D.].

Western Electricity Prices
Week of April 1-5, 2002
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 35.5-107 10.6-77
Mid-Columbia 24-36.5 24-26.5
COB 27-36 25-26
NP 15 31-38 23-26.75
SP 15 32-39.25 16-25
Palo Verde 30.5-40.5 12.75-22

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

The Western Price Survey is excerpted from Energy NewsData's comprehensive regional news services. See for yourself how NewsData reporters put events in an accurate and meaningful context -- request a sample of either or both California Energy Markets and Clearing Up.

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