Western Price Survey
April 28, 2006
A easing in the price of natural gas--brought about by a drop in the cost of oil--pressured power prices downward in California during the first half of this week. Also weakening the value of natural gas-fired power was the return to service of Southern California Edison's No. 2 unit at the San Onofre Nuclear Generating Station. That 1,122 MW unit has been creeping back to service after a refueling outage that morphed into a repair outage. Having spent much of last week at 18 percent of full capacity without actually sending out any power to the grid, the unit was listed by the Nuclear Regulatory Commission as operating at 95 percent on Thursday and Friday. Unit No. 3 remains off line for a refueling.
Southern California now has a slightly bigger piece of the San Onofre Nuclear Generating Station. The Federal Energy Regulatory Commission issued an order on Monday authorizing Edison to acquire the City of Anaheim's 3.16 percent stake in SONGS.
The move brings Edison's share of the 2,150 MW nuclear facility to 78.21 percent. San Diego Gas & Electric owns 20 percent, and the City of Riverside owns 1.8 percent.
Anaheim's share was about equal to 68 MW. The city says it wanted to divest from SONGS to make room in its generation portfolio for more renewable resources. FERC found that the acquisition would not have an adverse impact on rates charged to Edison wholesale customers, and would not stifle competition. Anaheim's interest in SONGS had a value of about $10 million, according to an application Edison filed with FERC.
South of Path 15 peak-power costs slipped in relative proportion to the increase in output at SONGS No. 2. Daytime power traded for between 53.75 mills and 57.25 mills/KWh on Monday before shedding 2 to 3 mills the following day. By Wednesday the cost of peak power in the region dipped to between 51.75 mills and 54.50 mills/KWh. End-of-week trading for next-Monday delivery brought the price back up to between 50 mills and 56.25 mills/KWh. Off-peak power in the SP15 zone attracted as much as 30.50 mills/KWh at the beginning of the week before settling on Wednesday for between 24.25 mills and 28 mills/KWh. Friday saw transactions closing for between 23.50 mills and 30.50 mills/KWh.
Prices in the North of Path 15 region moved little this week, the spread remaining comfortably in the range of 49.50 mills to 54.50 mills/KWh. Off-peak power delivered into the NP15 region cost as little as 13 mills/KWh on Tuesday but bumped up to a range of 15 mills to 22 mills/KWh in late-week trading.
Around-the-clock power was trading in Thursday's session, when packages scheduled for Sunday delivery changed hands. Friday deals represented power scheduled just for Monday delivery. ATC power at NP15 drew between 32.75 mills and 42.50 mills/KWh, while SP15 power cost between 37.50 mills and 43 mills/KWh on Thursday.
The unorthodox trading calendar was due to May 1 falling on a Monday. Rather than moving packages over the April/May split during the Sunday-through-Monday period, trades conducted Wednesday were for Friday and Saturday deliveries, Thursday deals were for Sunday packages and Friday transactions were scheduled for shipping on Monday.
Palo Verde power values continue to be pressured by the outages of Units No. 1 and No. 3 at the Palo Verde nuclear plant. With replacement power coming mostly from gas-fired generation, the price of power at the Southwest hub tracked the price of the fuel. The price of peak power at Palo Verde matched the trajectory of SP15 power values during the week. After opening on Monday moving for between 52.25 mills and 54 mills/KWh, daytime power at PV scooted down to a range of 51.25 mills and 52 mills/KWh and stayed there through Friday. Off-peak power changed hands for between 23 mills and 32 mills/KWh on Monday before narrowing to a range of 24 mills to 27 mills/KWh on Wednesday.
Northwest power bucked the trend this week and moved up as the week progressed, largely on expectations of increasingly warm weather in the region. On Monday the price of peak power at Mid-Columbia ranged from 19 mills to 26.50 mills/KWh. Tuesday saw the price hit 30 mills/KWh and 34 mills/KWh on Friday. Nighttime power at the Mid-C location managed to stay in the single digits throughout the week. After trading for a low of 3.50 mills/KWh on Monday, off-peak power drew a high of 9.75 mills/KWh on Friday [Shauna O'Donnell and Chris Raphael].
Big Gas Price Drop Likely to Stall
The price of natural gas delivered into California lost nearly $1 over the course of the week. The drop was directly tied to the reversal in the escalation of oil prices. While the futures price for a barrel of oil hit a record high of $75.35 last Friday, the price dropped steadily during the first four days of this week. June oil closed on Thursday at $70.61 per barrel.
After opening Monday trading for between $6.24 and $6.43/MMBtu, Topock deliveries of gas cost between $5.10 and $5.74/MMBtu on Friday. Malin gas prices skated down to a low of $5.50/MMBtu on Friday after opening the week trading for as much as $6.38/MMBtu. At midweek the price at the Northern California border ranged between $5.85 and $6.05/MMBtu.
Still, the sinking trend may end soon as oil moved up to $72.85/barrel on Friday on renewed anxiety about Iran's nuclear program [S. O'D.].
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