Western Price Survey / Archives
May 7, 1999
As if testing the waters of price resistance, Western power ran to the edge of the ocean this week then retreated after getting its feet wet with peak prices above 30 mills/KWh at several hubs.
The California Power Exchange set the high-water mark at 31.5 mills/KWh for Thursday and Friday daytime deliveries. PX off-peak reached 19 mills/KWh on Thursday before backing down to 16 mills/KWh. Adjacent bilateral hubs followed the PX closely, with peak prices stepping up to the 30 mills mark before coming down a bit for Friday/Saturday trades.
Behind the relatively high prices was an unexpected burst of heat in the Southwest, where some locations saw temperatures rise above 90 degrees and peak prices at Palo Verde tip-toed past 30 mills/KWh. Also, continued natural gas price pressure throughout the West was cited as a factor, along with residual uncertainties about hydroelectric availability from the Pacific Northwest.
Mid-Columbia prices were lagging behind other hubs earlier in the week until Bonneville Power Administration pulled out of the daily market for surplus power sales. Northwest prices shot upward to 29.75 mills/KWh midweek while California-Oregon Border prices briefly crossed 30 mills/KWh before retreating.
By Thursday trading for the start of the weekend, most peak transactions in the region were in the 27 mills to 28 mills range while off-peak stayed around 15 mills to16 mills/KWh.
In generation news, the Palo Verde No. 2 unit climbed back to near- full capacity after its refueling outage. A San Juan unit trip held little sway over prices.
Belying the unseasonably high prices for prescheduled trading was a relative weakness in real-time markets and at the California Independent System Operator's imbalance market. The closer they came to real-time delivery, the lower sales prices became. By Thursday, the Cal PX "day-of" market was tracking 4 mills/KWh below the pre-set prices for the same hours. While utility schedulers puzzled over the apparent pricing discrepancy, others kept waiting for the market shoe to drop in the form of increased hydroelectric generation in the Northwest. The supposed abundance of potential energy in the form of snow pack seems to be sticking around longer than expected. "It ain't melting," complained one marketer. "And it's getting frustrating waiting" [Arthur O'Donnell].
Turbulence Marks Gas Markets
Natural gas traders were in for a wild ride this week as price rose and fell over a broad range and different hubs took on disparate dynamics. Once again, the main driver for changes was whatever the NYMEX futures screen showed and daily physical prices varied penny for penny with the June futures contract at the Henry Hub. As a result, gas prices showed great volatility on a day-by-day basis.
Behind the NYMEX movement was what some traders felt to be an over- reaction to weekly storage figures released by the American Gas Association late on Wednesday. "There was a bearish effect even though the numbers were not bearish," said one trader. " Prices are dropping as we speak."
Where they would stop was still uncertain late Thursday but the range was quite broad. Over the course of the week, Permian Basin supplies showed the widest spread-between $2.05/MMBtu at the beginning of the week and $2.22/MMBtu before settling at $2.18/MMBtu.
Not as extreme were Southern California Border prices which roamed between $2.13 and $2.28 before centering at about $2.25/MMBtu. San Juan traded at a lower level, between $1.99 and $2.08/MMBtu.
The Alberta hub index zoomed from $(C) 2.63 Gigajoule up to $2.78 then slipped back to $2.70/Gj on Thursday, leaving traders with a slight case of whiplash [A O'D.].
PNM Picks Up Alstrom as Partner for Transmission to Mexico
Public Service Company of New Mexico this week named industrial equipment manufacturer Alstrom as its partner in building a proposed 800 MW to 1000 MW transmission intertie from the Palo Verde switchyard into Northern Mexico. The Sonora-Arizona Interconnection project is billed as the first major tie-line between the Western System Coordinating Council region and the grid operated by Mexico's Comision Federal de Electricidad (CFE). The developers have not yet decided whether the line will carry power via alternating current or direct current [A. O'D.].
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