Western Price Survey / Archives
May 24, 2002
Western power traders got to wrap up the week early with advance trading for the extended Memorial Day weekend The prevailing mood was "warm and wet" according to traders in large part because warm spring rains unleashed a flood of hydroelectricity in the Pacific Northwest. Resulting low prices washed throughout the region, pushing natural gas off the margin and idling many generating units. Loads remained moderate such that the refueling absence of two California nuclear projects was not even a factor in pricing.
Weather forecasts are mixed heading into the weekend, with some projections of rain in California but higher than normal temperatures in the Southwest on Sunday and Monday.
Except for aberrant weather in Canada, that wreaked havoc with prices and supplies on the Alberta Pool on Wednesday, the Western operational situation appeared stable. Alberta faced a problem with high winds and wet snow that caused numerous and repeated transmission line outages. For two periods on Wednesday morning, the connection with British Columbia was lost and the TransAlta Link was reported off and on several times. Prices proved volatile, with the Pool clearing price rocketing to 827 mills/KWh during one hour and above 300 mills/KWh at other times while the system was being reconfigured to move power around where it was needed. The pool settled down into is usual pricing range later in the week.
California loads just barely hit 30,000 MW on Wednesday but were heading higher on warm temperatures, according to the California Independent System Operator. On Monday, the 1,125 MW San Onofre No. 2 joined Diablo Canyon No. 1 in scheduled refueling adding to the swelling spring maintenance list to almost 16,000 MW on Thursday. The big units on the unplanned side of the outage ledger included the 440 MW Mohave No. 1 and a 750 MW unit at Four Corners. Though based outside of California, those two coal- fired facilities are part owned by Southern California Edison. However, there seemed plenty of reserve margin to go around in the region, especially with hydro imports readily available. Bonneville Power Administration was offering 200 MW of daily surplus at market prices but then shifted to offer 400 MW of off- peak only for Sunday and Monday deliveries.
Power prices declined steadily. Where Mid-Columbia has been in the low 20s at the start of the week, peak prices dropped to 10 mills/MWh and off-peak fell to the 9 mills/KWh vicinity for Friday/Saturday. California/Oregon Border prices slipped from 24.5 mills to 16.5 mills/KWh at peak and 11 mills/KWh off- peak. In-state prices were seen at 20.5 mills to 22 mills/KWh on peak in advanced trading but were being undermined by weak demand. Off-peak slipped to 12 mills to 13 mills/KWh.
Palo Verde dipped from as much as 27.5 mills earlier to the 19 mills to 21 mills/KWh range for Friday/Saturday peak hours and to 11.75 mills to 12 mills/KWh for off-peak. Four Corners was on the low side of the peak range while Mead took the higher end. Southwestern real-time energy was reported as low as 6 mills to 9 mills/KWh [Arthur O'Donnell].
Gas Shoved Off Margin by Hydro
Natural gas prices across the West slid lower and lower this week. Even though the Southern California Border price tried to cling to the $3/MMBtu level, by Thursday it washed below $2.85/MMBtu in late trading. "We've been trying to sell but the appetite for volume is not there," one trader reported. Instead, the deluge of hydroelectricity pushed gas generation off the margin electricity prices to low levels.
There were indications that gas previously purchased for electric generation in Southern California to make up for the expected San Onofre nuclear refueling outage was being dumped on the market at low, low prices. SoCal Gas had allocation limits on its system much of the week.
Injection into storage across the nation is on the rise, with the Energy Information Administration reporting a 68 Bcf injection last week.
The downward movement in gas pricing was first seen in northern markets as the SF CityGate fell from $3.17/MMBtu to $2.68/MMBtu, comparable with Malin, which had not been over $3 but dropped to $2.65/MMBtu Thursday. The diminishing spread between the two points on either side of the PG&E pipeline system indicated there was little profit in moving gas into the state.
In the Southwest, Permian Basin prices bounced around the $3 mark in a range of $2.90 to $3.08/MMBtu while the San Juan price actually picked up slightly from its low of $1.90 on Monday to as much as $2.35/MMBtu midweek before settling at $2.10/MMBtu.
The Alberta price fell from $(C)4.0/Gigajoule to $3.78, then bounced up to $4.12/Gj [A. O'D.].
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