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Western Price Survey / Archives

May 12, 2000
Market Finally Cools Down but Some Expect Another Rebound Next Week

Generation outages from Washington to New Mexico-and almost everywhere in between-forced Western power prices into zones usually reserved for summer peaks. As the week wore on, though, the market calmed and prices dropped to less extremes.

Some, however, are betting for a repeat next week. The Bonneville Power Administration, for instance, set its daily surplus offerings for Monday, May 15, above 51 mills/KWh and withdrew off-peak offers altogether. While BPA has recently been following the California Power Exchange, its high price postings indicate that its energy traders believe the price volatility of the past two weeks has not ended.

One uncertainty is how much power will be coming from Washington state's only nuclear unit, now rechristened as the Columbia Generating Station. The plant has been in load following mode at 60 percent but will drop to 20 percent over the weekend for scheduled repairs. When it returns Monday, power traders at BPA would like to see 75 percent of capacity but some other maintenance appears to be limiting how much the plant can actually produce.

The Northwest power situation was unusual this past week because prices climbed higher than those in California and occasionally overlapped those in the Southwest. Early outages at Colstrip and Grand Coulee Dam deprived schedulers of power at peak and into the evening hours. Midweek, schedulers were still working around outages at Idaho's Jim Bridger and Dave Johnson power stations as the Mid- Columbia price hit 49 mills/KWh.

The premium spread across borders, with the Nevada/Oregon Border price climbing to 46 mills to 49.5 mills/KWh and the California/Oregon Border tariff centering at 40 mills/KWh after peaking much on Monday.

Hydroelectricity was scarce and off-peak power rose to between 26 mills and 30 mills in Northern California and the Northwest. The Cal- PX overnight clearing price climbed steadily to 31.2 mills/KWh by Friday, compared to the 17.7 mills price set early in the week.

Cal-PX daytime clearing prices were unsettled as they slipping from 39.5 mills midweek to 37.8 mills and then back up to 38.8 mills/KWh for Friday.

The biggest change in the market was on the Cal-PX day-of charts, which were still striking 130 mills/KWh during the peak period hours Wednesday but settled down to 40 mills/KWh on Thursday and Friday.

The Southwestern market had its share of unexpected outages beginning with a valve failure at Palo Verde No. 2 that cut the 1270 MW plant to about half capacity on Tuesday. San Juan No. 2 tripped on a tube leak and two 750 MW Four Corners units were offline midweek-one finishing up spring maintenance but the other experiencing a tube leak outage. The units were back into service by week's end, helping Arizona utilities meet the challenge of another burst of hot weather and higher than expected loads.

Palo Verde hub prices started the week at 70 mills to 80 mills/KWh range, but dropped into the 39 mills to 44 mills/KWh range by the end of the week. Four Corners was wavering around 42 mills after being up to 55 mills/KWh previously.

The skittishness of the market is contributing to expectations of possibly high prices into the summer. NYMEX futures logged prices up to $84.20/MW for August deliveries at Palo Verde, $65/MW for July. August COB contracts were up to $71.35/MW on NYMEX and $56.35 for July. Futures for September delivery at COB were in the mid-60s as well [Arthur O'Donnell].

Gas Prices Rock Higher

The dawning realization that natural gas storage supplies are much lower than usual and fuel demand is already higher than expected this year helped push gas prices upward this week. The main trigger was the midweek storage report from the American Gas Association showing net injection of 58 billion cubic feet.

That number in and of itself was not unexpected, but traders increasingly noted that gas in storage is about 25 percent lower than last year. With gas prices averaging more than 50 percent higher so far in 2000, no one expects the situation to change anytime soon and national benchmark prices zoomed as a result.

Short-term pressures come in the form of three successive waves of hot weather in the US Southwest, plus expectations of more high temperatures spreading into Texas next week.

The Southern California Border price jumped to $3.27/MMBtu Thursday after hanging around $3.10/MMBtu earlier. Permian Basin showed strength at $3.10/MMBtu and San Juan rose to $2.94/MMBtu.

Northern market prices were also higher with Malin exceeding $3.01/MMBtu and the PG&E CityGate hitting $3.40/MMBtu-about $0.20 higher than the start of the week.

The Alberta index inched up to $(C)3.85/Gigajoule midweek, then shot to $4.12/Gj on Thursday, eventually landing at $4.04 [A. O'D.].

Western Electricity Prices
Week of May 8-12, 2000
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 30.8-500 12.5-25
California PX (WAC) 33.2-39.5 17.7-31.2
Mid-Columbia 35-49 18-29
COB 36-47 20-30
Palo Verde 39-80 23-25

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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Contact Shauna O'Donnell, editor with questions regarding Price Survey Content.

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