Western Price Survey / Archives
May 23, 2003
The summer season's first hot spell rolled into California this week, just in time for the Memorial Day holiday next Monday. The electricity system shouldered the bulk of the strain on Wednesday as temperatures edged upward during the early part of the week and receded slowly in some regions on Thursday and Friday. Peak demand topped out at 35,388 MW Wednesday afternoon, and the peak-demand forecast for Thursday was estimated at 33,687 MW. By the time Thursday rolled around, the forecast had changed to 34,865 MW and actual demand was recorded as high as 34,886 MW. Nevertheless, with some adjustments here and there, the grid seemed to take the burden in stride.
"Today's outlook is nice and healthy," said California Independent System Operator spokesperson Stephanie McCorkle on Wednesday. The amount of available capacity has not concerned the grid operator as it has been more than adequate to meet load. Outages throughout the week were reported in the 15,000 MW to 18,000 MW range, with most of those scheduled in advance.
The Western Electricity Coordinating Council reported that reserve levels in the California/Mexico area dropped to 6 percent on Wednesday while the rest of the West sat at about 20 percent reserves.
May 21 saw available transmission capacity in the Cal- ISO day-ahead market drop down to nil for a number of hours for flows coming into California on the Palo Verde line and for transfers north to south on Path 26.
Thursday's numbers showed that tightness on the wires had relaxed a bit, as all hours showed some available capacity.
Notification of anticipated over-generation persisted on Cal-ISO's OASIS system throughout the week. The grid operator notified market participants that for hours ending 03, 04 and 07 on Thursday it expected possibly 1,513 MW, 1,809 MW and 2,338 MW, respectively, of excess generation. Cal-ISO called for decremental energy bids to ease the situation, which arose, in part, because of warmer-than-expected temperatures during the wee hours of the morning.
In other grid-operator news, Cal-ISO said that its automated mitigation procedure was triggered by swelling prices during hours ending 18 through 20 on Wednesday, though none of the AMP tests were failed.
Electricity sales were bunched up during the first half of the week, as trades conducted on Wednesday were for power delivered on Friday and Saturday in anticipation of the following Monday's holiday.
This Monday's price for the following-day peak delivery at Mid-Columbia ranged between 35 mills/KWh and 63.25 mills/KWh, then sagged to between 29.50 mills and 37.50 mills/KWh on Wednesday. Peak prices for Southwest power also tapered down, but just slightly. Palo Verde prices came in at between 49 mills and 59.75 mills/KWh at the start of the week and at between 51 mills and 59.50 mills on Wednesday.
Trades on Wednesday included Friday and Saturday deliveries in preparation for the coming holiday. With the expectation of softened loads on those days, prices also softened a bit. Late week trades were for Sunday-Monday delivery and prices remained steady [Shauna O'Donnell].
Gas Supply Concerns Grow
Natural gas prices this week followed electricity prices, rising in response to weather-induced demand, but again, like power prices, were not greatly affected. Still, the issue of natural gas supplies seemed to be on the minds of many this week.
"I don't think we've yet seen the implications of [price pressures], but they are going to arise, and it is coming to your subcommittee," Federal Reserve chair Alan Greenspan said during testimony before Congress' Joint Economic Committee. Greenspan called the situation a "very serious problem." For his part, Secretary of Energy Spencer Abraham this week called on energy leaders to attend a June summit on natural gas supplies and the low amount currently in storage.
The federal Energy Information Administration released its weekly gas storage data on Thursday, showing a gain in stocks of 90 Bcf within the past seven days. The actual injection beat the estimates, but the total amount in storage is still way down from previous years' figures [S. O'D.].
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