Western Price Survey / Archives
April 30, 2004
This week's weather rollercoaster in the West took power prices on a ride. The beginning of the week saw a surge in the price of peak power, but by Wednesday breezes blowing in from the Pacific cooled off California and tempered the rise in power costs. By Thursday and Friday, when trade prices tend to weaken on account of upcoming weekend low demand, prices lost anywhere from 5 to 10 mills at Western hubs. But, expectations of unseasonably warm weather returning to California pushed up the cost of power for Monday delivery back up, with off-peak power exhibiting the biggest jump from mid-week prices.
Trading volumes on Wednesday were larger than normal because of the turn of the month. With May 1 falling on Saturday, packages were moving midweek for the Thursday-Friday period. Deals conducted Thursday were for Friday deliveries and end of week trades were for Monday packages.
The California Independent System Operator opened the week by calling a system alert--one step below a Stage One Emergency. The alert was sandwiched between two days of restricted maintenance--when power-plant operators are prohibited from conducting any elective repairs on their facilities. Many new high-temperature records were set throughout California on Monday and Tuesday.
The heat pushed demand in Cal-ISO territory close to the 40,000 MW mark on Tuesday afternoon, topping out at 39,852 MW, but by Wednesday peak load in the grid operator's territory stayed below the 35,000 MW mark. Thursday, the recorded peak load in Cal-ISO territory had shrunk to 31,090 MW.
Trading for Monday deliveries had occurred last Friday, before the weather turned significantly hotter. Most Western hubs were trading peak power on Friday in the mid-40 mills/KWh range. On Monday, peak power for next-day delivery soared up to 65.25 mills/KWh at NP15. High-demand power at SP15 trailed just behind, moving for between 60.75 and 63 mills/KWh on Monday. Forecasts of cooler weather led to trimming of prices in Tuesday trading. Power deals made for Wednesday delivery at NP15 managed to attract 56 mills to 62 mills/KWh, while the price for peak-time power at SP15 was shaved to between 56.50 mills and 60.75 mills/KWh. The cost for power scheduled for delivery on Friday and Saturday dropped 10 to 12 mills off the peak-demand price and shed about 5 mills for low-demand power.
Even California-Oregon Border hub power went above the 60 mills/KWh mark this week. Peak-load power at COB traded for between 53 mills and 61 mills/KWh on Monday before sinking down to the 50 mills to 51 mills/KWh range in Wednesday trading. Monday deliveries at the hub moved for a high of 64 mills/KWh in Friday trading.Off-peak power at the hub opened the week at a high of 44.75 mills/KWh but shed 4 to 5 mills by midweek.
Further north, at Mid-Columbia, the relative economics of hydropower kept prices at that hub lower than in California--where much more generation comes from gas-fired plants. Mid-C high-demand power changed hands for between 47.75 mills and 52.50 mills/KWh on Monday before dropping down to a high of 47.75 mills/KWh on Wednesday. Still, the forecast of increasingly warmer weather in California drove Mid-C power up to 53 mills/KWh on Friday. Off-peak power at the Northwest hub hit a high of 43.75 mills/KWh on Monday, fell to between 37.25 mills and 40.50 mills/KWh by midweek, then swelled to a high of 47 mills/KWh [Shauna O'Donnell].
Spot Gas Remains Strong Despite Healthy Storage Numbers
Nearly all Western United States natural gas hubs reported prices above the $5.00/MMBtu mark every day this week. San Juan Basin was the lone exception as gas at that hub attracted $4.97/MMBtu for a short while. High demand for power-plant fuel kept the cost of natural gas high, despite Energy Information Administration numbers showing a hefty injection into storage facilities last week.
According to the EIA figures released Thursday, last week saw an increase of 78 Bcf of gas in underground storage in the Lower 48, bringing the total up to 1,155 Bcf. Last year at this time, there was 754 Bcf in storage. Still, the comparison does not look quite as good when reviewed along side the five-year average. Stored gas is currently running 2.9 percent less than the five-year average of 1,189 Bcf. In the West, there is 12 percent less gas in underground storage when compared to the five-year average.
At the Malin hub, gas trades were executed for between $5.22 and 5.265/MMBtu at the beginning of the week. The price gained 10 to 20 cents throughout the week, closing on Friday at $5.40/MMBtu. As usual, PG&E CityGate gas led the pack this week, topping out at $5.89/MMBtu in Tuesday trading [S O'D.].
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