Western Price Survey / Archives
June 2, 2000
While traders had expected a late-week convergence of prices at bilateral hubs and on the California Power Exchange, what instead happened was a reversal of roles as CalPX daytime clearing prices rose to 70 mills/KWh for Friday deliveries and other spot markets dropped to the prior exchange level. Convergence occurred in the off-peak market where most traders appeared to agree that 40 mills to 43 mills/KWh was a reasonable price for energy in these unreasonable times.
In the week following California's first power emergency of 2000, the prevailing market prices might be likened to a Western plateau-high and wide. The low-load Memorial Day holiday on Monday featured relatively moderate prices that soon gave way to higher peaks. As a result, the week's range was broad, from 55 mills to 70 mills on the CalPX, and from 60 mills to 85 mills/KWh everywhere else. Some Southwestern transactions and a few hours on the CalPX hour-ahead and Cal-ISO imbalance energy markets hit 100 mills/KWh as a kind of reminder that anything is possible.
Although temperatures remained above 100 degrees in Arizona and Nevada all week there were no significant load peaks, transmission constraints or generation shortages reported. Just an overall feeling of insecurity based on recent experience and exceedingly high natural gas prices.
On the resource side, Diablo Canyon No. 1 returned to full service by Tuesday morning. The Columbia Generating Station was at full power Friday, after wavering between 75 percent and 80 percent.
There was a brief problem at Navajo No. 2 on Sunday night forcing the 740 MW unit to reduce output to 275 MW. The 750 MW Ormand Beach unit in California was reported off for repairs on Tuesday, and some shuffling of available units at Colstrip coal plant in Montana was being talked about by traders. Hydropower is still being hoarded by some Northwest federal water managers but other traders celebrated the markup between hydro and the prevailing market prices by selling as much as possible.
New on the generation scene is the 140 MW Cobisa peaker in Albuquerque, which has been in testing operations with a target start date of June 5. The dual-fueled plant may offer Public Service New Mexico with a hedge against high natural gas prices when it is declared fit for duty [Arthur O'Donnell].
Gas Tanks on NYMEX Hemorrhage
Spot natural gas prices took a dive on Thursday, but traders suggested there was even more bottom to fathom. The precipitating event was a "hemorrhage" on the NYMEX screen after most of the day's trading had been completed. Western spot prices for the day had already been locked in so the price did not go down quite so far as NYMEX's $30 drop.
But with the peaks seen midweek, there was lots of room for erosion. After starting out at relatively mild levels after the holiday week, prices shot up by $0.50/MMBtu at the Southern California Border. SoCal's price began at $4.31 and reached as high as $4.85/MMBtu before settling in the $4.69 to $4.73/MMBtu range. El Paso Permian Basin climbed from $4.00 to $4.38, then dropped a dime to $4.28/MMBtu. San Juan edged down from $4.21 to $4.18/MMBtu-still up from the $3.71/MMBtu starting point.
Northern markets were highly influenced by the strange happenings in Alberta, where unfortunately scheduled processing plant maintenance took as much as 6900 MMcfd out of the deliverability pipeline. Instead, shipper had to withdraw supplies from storage-a highly unusual event for this time of year and a possibly risky move if the supply squeeze continues into the summer.
"There's not enough gas at AECO to meet export pipeline nominations," one trader reported. "People are pulling supplies out of the ground to meet demand."
Alberta prices topped $(C)5.97/Gigajoule midweek but the spot price subsequently fell hard to $5.12/Gj. The Altra AECO index figure found equilibrium at $5.38/GJ at the end of trading Thursday.
The Malin price had jumped from $3.78 to $4.31/MMBtu but then eased to $4.29/MMBtu.
With all the price volatility, unpredictable hot weather and supply concerns, gas traders are bracing themselves for the coming summer of uncertainty [A. O'D.].
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