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Western Price Survey / Archives

May 18, 2001
Market Turn-Around May Not Last

As though anticipating a repeat performance of last week's system emergencies, power prices started off at a relatively high point-then jumped off the cliff. How far they would plunge was the speculative question of the week, but it appeared there might be a trampoline at the bottom of the dive that could cause a rebound next week.

"It's not here to stay, everyone is just long this week," observed one veteran scheduler. Adding to the skepticism was the extreme volatility of prices, and while some welcomed a more-than 200- point drop in a single day, they were equally aware that a reversal could occur for almost any reason.

Still, conditions were right for a market correction of the very high prices previously set for last Monday-at or above 400 mills/KWh throughout the region. Though it remains hot in the Southwest, the weather was mild in California and downright wet in the Pacific Northwest, where a midweek rainstorm brought "a big slug of water" into reservoirs and river systems.

Bonneville Power Administration was briefly back in the market, formally offering 200 MW at prices set by the Dow Jones Indexes. The public offer evaporated for the weekend, but BPA was engaging in fish- related water releases that generated both controversy and excess electricity.

The California Independent System Operator was still having a hard time pinning down load forecasts and appeared to be constantly revising expectations. However, the guessing game was not being done under pressure of a Stage Three Emergency. In fact, with peak loads generally sticking in the 31,000 MW vicinity, Cal-ISO did not advance past warning status. Another positive development was the general trend of returning power plants. Reported outages were just over 11,000 MW Thursday, with unplanned outages down to 4,444 MW from 5,200 MW early in the week and planned maintenance dropped to 6,500 MW.

The biggest item of interest was return to service of Palo Verde No. 1, which steadily ramped up toward full capacity on Friday. Also back after an extended outage was San Juan No. 2, while any number of California units came and went off the Cal-ISO list. Though it managed to squeeze out extra energy as it coasted towards a refueling hiatus, the 1,200 MW Columbia Generating Station is scheduled to pull its rods completely late Friday night. A Colstrip unit was also reported off line late Wednesday.

The calm market resulted in thin trading activity, which was another factor in diminishing prices as many buyers did not have to look beyond their own resources. A slight uptick for the weekend packages was noted especially in off-peak periods in the north, while a return to non-firm transactions in the Southwest kept a lid on prices.

Mid-Columbia settled in at 155 mills/KWh for peak power and the remarkably low 60 mills/KWh level for off-peak power. California/Oregon Border was thinly traded at 165mills/KWh at peak and 75 mills/KWh for off-peak. NP15 was seen around 140 mills at peak and 80 mills/KWh off-peak. SP15 was close to NP in the day but closer to desert prices at night.

Palo Verde was seen in the 130 mills to 150 mills/KWh range while Four Corners centered at 140 mills/KWh. Off-peak prices were influenced by non-firm deals at around 40 mills to 47 mills/KWh, but they had been even lower midweek [Arthur O'Donnell].

Northern California Prices Collapse

"There's too much gas" in the pipelines, said one trader, explaining the steep decline in prices at Northern California delivery points late in the week. The PG&E pipeline initiated a customer specific operational flow order that grew to a system-wide OFO Friday-imposing "zero tolerance" for discrepancies between nominations and actual takeout.

As a result, SF CityGate prices collapsed to $4/MMBtu, with Malin and PG&E/Topock prices close behind.

"No heat demand, generators have been constant, and everyone's been stuffing the system," reported the market watchers. Contributing to the situation was a big jump in storage injection figures both nationally and in Western fields.

The price trend elsewhere was for a more gradual decline to what some consider more normal ranges. San Juan even slipped below $3/MMBtu while Permian Basin prices kept a $1 premium.

Even SoCal Gas/Topock eased below $10/MMBtu, while the Alberta price bounced up and down on thin trading in the range of $(C)5.73/Gigajoule to $6.07/Gj [A. O'D.].

Western Electricity Prices
Week of May 14-18, 2001
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 97.8 9.5-65
Mid-Columbia 125-410 30-254
COB 135-390 40-235
NP 15 140-395 50-237
SP 15 140-378 40-158
Palo Verde 130-405 27-150

Archives of the Western Price Survey for the past year are also available online.


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

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