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Western Price Survey / Archives

April 20, 2001
Lack of Marketing Drives Prices Lower

CALIFORNIA ENERGY MARKETS may have uncovered the true cause of high energy prices in California and the West-power trading. A distinct lack of market activity this week resulted in a steep decline to bilateral prices. The dearth of trading related to a semi-annual meeting of the Northwest Power Pool suggested that the best solution for the failed market might be to keep traders and utility schedulers permanently away from their desks.

"There's nothing doing," said one marketer who was not attending the Reno meeting midweek.

The theory might not be completely valid, however. When traders returned to action Thursday, prices fell even further on low demand, sporadic rainfall and a big drop in natural gas prices. So, in the end, supply and demand could in fact be the biggest factors in setting market prices, followed by market conditions and fuel inputs-despite whatever politicians claim.

Another possible factor was the return to service of the DC Intertie last Sunday night after a nearly two week outage. Seven transmission towers leading to the Sylmar terminus near Los Angeles that had been blown over in a wind storm were restored. Also back on line was the 230 KV line bringing power from the Castaic pumped storage plant to Los Angeles, adding another critical resource to the mix.

During the three-day period that transactions were prescheduled, prices were mostly in the 220 mills to 280 mills/KWh range throughout the West, slightly higher in the north and lower in the south. Once traders got back to work, putting together weekend deals, prices slipped even further.

Mid-Columbia dropped to 230 mils/KWh at peak and 180 mills/KWh off- peak. There was almost no market at the California/Oregon Border, traders said. Price quotes were flat to Mid-C. NP15 dropped below 200 mills/KWh and SP15 slipped deeper into the 168 mills to 175 mills/KWh range.

Palo Verde took the bottom rung at 145 mills to 170 mills/KWh, but off-peak prices were similar to SP15 in the 95 mills to 100 mills vicinity.

New rounds of precipitation lent hope that reservoirs and Sierra snow pack would get an added boost. Even British Columbia saw welcome rain over its watersheds into the weekend.

The California Independent System Operator's list of power outages hovered around 12,500 MW this week, with several big units returning while others went off line. For instance, the 700 MW Pittsburgh Unit No. 7 came back midweek, just as Moss Landing No. 6 and 7 lost about 615 MW. Contra Costa No. 7 restored 270 MW and El Segundo No. 4 brought back 335 MW, and El Segundo No. 4 brought back 335 MW, but at the same time about 300 MW of Northern California hydro went out of service at Shasta and Belden. The balance between planned maintenance and forced outages also varied this week.

Still uncertain is the amount of QF power missing in action. Cal-ISO said it had not noted any appreciable increase in generation from the 3,000 MW previously reported offline, but utilities claim that only about 1,500 MW remains out now that payment checks have been mailed [Arthur O'Donnell].

Gas Takes a Steep Slide

The national trend of a deep slide in natural gas prices was mostly reflected in the Southwestern basins this week, although prices throughout the West also tumbled.

The prescheduling of generation demand took much of the "oomph" out of the market and moderate temperatures meant their was not much call for either heating or cooling.

The Permian Basin price fell from $5.33/MMBtu at the start of the week to just above the $5/MMBtu perch. San Juan took a steep slide from $4.94 to $4.29/MMBtu.

The SoCal Border eroded from $12.85 midweek to $12.50/MMBtu. Traders noted the increasing disparity between the SoCal Topock price and the PG&E Topock price, which is expected to grow even wider when full capacity is restored to Line 300 this weekend. The difference represents the fact that Southern California has had much greater demand while Line 300 going north is frequently underutilized.

Malin bounced around in a range of $10.60 to $11/MMBtu while the SF CityGate traded about $1 higher.

The Alberta hub has been seeing much reduced activity, with the result this week a lowered price. After starting out at $(C)7.68/Gigajoule, the AECO index settled at $7.25/Gj [A. O'D.].

Western Electricity Prices
Week of April 16-20, 2001
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 97-105 65-82
Mid-Columbia 230-280 180-200
COB 230-240 170-190
NP 15 230-240 170-190
SP 15 165-230 92-105
Palo Verde 145-225 95-115

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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