Western Price Survey / Archives
May 31, 2002
Peak prices moved higher and off-peak much lower this week as warmer than normal temperatures blanketed the West. Temperatures picked up to 110 degrees in Arizona and about 105 in southern Nevada. Northern California was trending warmer and on Thursday the California Independent System Operator posted a "no touch" notice for much of the afternoon to prevent unscheduled generation maintenance from cutting into available supply.
That did not directly impact energy prices, except for real-time deals because transactions for Thursday/Friday were done on Wednesday in order to close out the May monthly accounts.
With so much excess hydro power available in northern markets, however, many traders were relying on real- time purchases rather than prescheduled deals for any off-peak energy they needed. Some off-peak deals were reported as low as 4 mills to 7 mills/KWh. The longer people waited for daytime trades, however, the higher the prices went.
The regional disparities grew as well. Mid-Columbia daytime power rose from the 13 mills to 17 mills range Monday to 17.5 mills to 19 mills/KWh during midweek trading, while off-peak energy sank to the 7 mills to 8 mills/KWh range. Even though Southwestern prices were moving towards the 40 mills/KWh mark, especially at Mead, the expectations were that the heat wave over Nevada and Arizona would not last for very long and would probably dissipate by Saturday. Off-peak power in the desert was seen down in the 12 mills to 13 mills/KWh range.
California points seemed to average the difference between north and south. The California/Oregon Border price started the week below 20 mills but rose to about 27.25 mills/KWh Wednesday. Off-peak was logged at 9 mills to 11 mills/KWh. Some transmission work on the California/Oregon Intertie reduced southbound transfers to 4,100 MW and there was a 3,100 MW limit imposed Friday. That kept Northwest power shut in and prices low. Bonneville Power Administration upped its daily offering to 500 MW for Saturday, the most it has been in many months.
NP15 and SP15 both stepped upward from the mid-20s on Monday to the mid-30s late in the week. Off-peak was between 11.5 mills and 13 mills at NP and between 12.25 mills and 13 mills at SP.
The Diablo Canyon nuclear unit No. 1 is rousing from a refueling outage. On Friday morning it was reported at 49 percent and expected to be back to full capacity "over the weekend or early next week," said PG&E. The Columbia Generating Station had been down to about 70 percent last weekend but resumed full service midweek.
As loads in California and the Southwest climbed, more generators made themselves available for service. Cal- ISO's peak load was seen rising from the Memorial day low of 28,500 MW to a peak of 38,000 MW for Thursday. That was the highest peak of the year so far, but Cal- ISO is projecting diminishing demand for the next few days.
Unplanned outages fell from about 2,650 MW to 1,500 MW but then rose to 12,900 MW on Thursday with new problems reported at Mohave 2, Alamitos No. 4, and El Segundo No. 3 plus partial capacity cuts at the Delta Energy Center.
Despite the jump, Cal-ISO said returns to service by units in planned maintenance kept the system in equilibrium. The Western Electricity Coordinating Council projected that California/Mexico would maintain at least an 8 percent reserve margin heading into the weekend [Arthur O'Donnell].
Gas Scrambles to Higher Ground
Relative to the low points set for prices over the Memorial Day weekend, natural gas prices stepped upward in three stages before settling this week. The largest spread was seen at the San Juan Basin, which rose by about $1/MMBtu from the beginning of the week to the end, but the Southern California Border price showed nearly as much volatility as it moved from a low of $2.35 to a peak of $3.14 before easing to $3.06/MMBtu.
The momentum of the market was spurred by hot weather and expectations of power generation demand, especially in the Southwest. Though temperatures rose well over 100 degrees, the heat wave was not expected to linger and system operators predicted normal weather into the weekend. That helped turn the trend, as did a national storage injection report that came in higher than anticipated. After the Energy Information Administration said 71 Bcf was put into storage last week, gas futures contracts trimmed by about $0.25/MMBtu.
The spread between Malin prices and the delivered CityGate costs varied from negligible on Monday to about $0.15/MMBtu midweek. By the end, Malin was averaging $2.75/MMBtu while the CityGate was at $2.84/MMBtu.
The Alberta price rose and fell with little relation to US markets, ranging from $(C)3.45 Gigajoule to $3.78/Gj [A. O'D.].
Archives of the Western Price Survey for the past year are also available online.
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