Western Price Survey / Archives
May 28, 1999
Western energy markets showed quite a bit of volatility this week, as the California Power Exchange recorded higher daily loads and a wide range of prices. The high pricing point of the week came on Wednesday's bidding for Thursday deliveries. The market clearing price for peak power reached 39.47 mills/KWh but that masked a few hours of prices above 50 mills/KWh in the late afternoon. Daytime prices bounced around all week, starting at 38 mills for Monday, dropping to 27 mills on Tuesday, climbing up to 39.5 mills then dropping to 32.5 mills/KWh for Friday.
The unpredictable pattern was caused mainly by failed expectations. Marketers were hoping that warm weather over the past week would loosen hydroelectric resources at the same time it drove utility loads higher. Both events occurred-just not to the extent expected. PX loads cranked up to 530 GWh on Thursday but then deflated by Friday.
The other more discernable trend was constant lowering of off-peak prices. The PX dropped steadily from 20.8 mills on Tuesday to 11.9 mills/KWh for Friday deliveries. More available hydro power was responsible for that, according to traders. Bonneville Power Administration returned to the sellers' slot in the market, offering 200 MW at prices tied to the PX beginning midweek.
"I think we may be seeing the start of hydro season," one trader said optimistically.
The Cal-PX was in the forefront of market dynamics, but other hubs generally followed the week's trends and exhibited rather wide ranges as a result.
Mid-Columbia and the California/Oregon Border rose and fell between 26.5 mills and 36 mills/KWh. Overnight prices fell as low as 11 mills after rising to 17 at COB.
The range reported at Palo Verde and Four Corners was 28 mills to 35.5 mills/KWh
Prices and expected loads took a dive at the end of the week on anticipation of the usual Memorial Day weekend dearth of electric demand. With traders moving to offering 24-hour blocks for the weekend, peak prices blended with off peak to as low as 12 mills/KWh in the Northwest, 15 mills/KWh at COB and less than 20 mills/KWh at Palo Verde.
Within the Northwest, a Grand Coulee Dam unit tripped offline, taking 550 MW of hydro out of the market on Thursday. Earlier outages in the Southwest were cleared up as the week progressed.
Next week, the Pacific AC Intertie will be constrained to about 4000 MW for scheduled maintenance. The DC line will be out of service for a few hours over the weekend, but that is considered a minor disruption.
The Alberta Power Pool experienced a highly volatile week after a quiet Victoria Day celebration on May 24. Even though Alberta utility loads are not especially high, several generators are on maintenance, leaving the pool shy of resources. As a result, daytime peak prices zoomed to as much as 524 mills/KWh on Thursday after reaching 500 mills several times previously during the week.
A pool spokesperson said the system has been responding by taking in more import capacity over transmission lines and also calling into effect its voluntary customer load shedding program to ease the supply crunch.
Although pool operators reported several forest fires threatening power lines and at least one incident of a downed line, that did not seem to play a major role in the price swings [Arthur O'Donnell].
Natural Gas Gravitates to a Center Price
Gas markets appeared normal to higher this week, with little change despite continued low storage injection reports from the American Gas Association. More important to the West was the unusually high range of electricity prices which made gas-fired generation the market driver. "There's plenty of buyers," reported one trader. "Power prices kept utility generation in the market."
While AGA figures released on Wednesday brought a little movement to the NYMEX futures screen-where prices for June and July moved higher on expectation of summer power demand-that "did not juice the California market," according to an observer. Prices in California and the Southwest were already elevated, in part because of maintenance at El Paso's Blanco gathering facility in San Juan Basin had kept about 250 MMcf/d out of action.
The San Juan price ranged between $1.96 and $2.04/MMBtu but centered at $2.00 by late Thursday. Permian Basin was higher at $2.05 to $2.10 all week, and the Southern California Border price vibrated between $2.20 and $2.27 MMBtu before centering at $2.25/MMBtu.
Alberta prices followed their own trend, moving higher from $(C) 2.65 Gigajoule to $2.80/Gj during the week. The end of the week Alberta Index price came in at $2.78/Gj [A. O'D.].
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