Western Price Survey / Archives
June 4, 1999
Storms in both Northern and Southern California combined with paltry loads to take the bottom out of Western electric prices this week. Thunder, lightning, hail and snow visited the upper half of the state, and snow fell at Big Bear to the east of Long Beach. After beginning the week at 437 GWh, loads on the Power Exchange reached 501 GWh during the week before dwindling to 482.6 GWh for Friday deliveries. Prices for overnight power at CalPX plunged to as low as 3.8 mills/KWh.
According to traders, the start of a new month directly impacted the market. Firm contracts for the next 30 days and "doggone cold" weather resulted in thin demand and anemic off-peak prices at virtually all hubs. "Nobody was buying," said one utility trader.
News of increased inflows to California reservoirs-coupled with talk of Grand Coulee Dam filling at a faster rate than expected-appeared to affect the cost of power. Mid-Columbia, for instance, shrank on increased hydro generation. Peak prices were 16.5 mills to 19 mills/KWh midweek but low-load power dipped to 4 mills to 5 mills/KWh. Bonneville Power Administration continued to offer 200 MW of daily surplus power. Peak deliveries were capped at the Power Exchange price, but off-peak varied between 5 mills to 8 mills/KWh for Northwest deliveries or the PX minus .5, whichever was higher.
While California/Oregon Border prices showed strength at 22 mills to 23 mills/KWh for peak periods, off-peak deliveries drew 5.5 mills to 7.5 mills/KWh. Palo Verde averaged between 22 mills and 25 mills/KWh, and off-peak prices dropped to between 7 mills and 10 mills/KWh. Traders reported off-peak prices at Four Corners as low as 9 mills/KWh.
Power over the California/Oregon Intertie is slated to be curtailed to 2450 MW on the North-South path beginning Saturday. The maintenance outage on the line, usually rated at 4150 MW, will last from 6 am to 6 pm. The COI's South-North path will experience a similar curtailment all day Saturday, with capacity reduced from 4600 MW to 2450 MW.
In the Southwest, Four Corners Unit No. 4 went off-line this week due to problems with the generator's "exciter grounds." The unit is expected to return to service Friday. San Juan Unit 1 was scheduled to shut down following peak loads Thursday evening. The plant will undergo 72 hours of maintenance work related to precipitator grounds and should resume operations before Monday.
Effective June 4, the 670 MW Centralia 2 coal plant in Washington will ramp down to 50 percent of capacity for about two weeks. The maintenance hiatus is scheduled to end by June 20.
Prices at the Alberta Power Pool, encouraged by maintenance at several area power plants, continued their recent bout with vertigo as real- time prices soared to 541 mills/KWh [Jason Mihos].
Low Demand Pancakes Gas Prices
With loads centered more on heating than cooling for the first week of June-and light heating loads at that-prices for natural gas betrayed a "blithesome" market, in the words of one trader. Industry observers pointed to a lack of demand throughout the West that helped to keep prices flat despite a nationwide increase in NYMEX futures prices.
"There's no generation demand to speak of," said one trader in commenting on this week's tight, "range-bound" trading.
Other insiders indicated that market stakeholders are going with longer-term contracts in response to increased hydro supplies and previous months' experience of "going short and getting burned," according to one trader. Another trader reported that electric generators also entered the market to sell excess gas this week.
Prices at the San Juan Basin held in the low $2/MMBtu range, while Permian supplies reached $2.21/MMBtu for Thursday deliveries. Prices at the Southern California Border moved between $2.12 and $2.25/MMBtu during the week, and Pacific Gas & Electric's Citygate hub stayed in the low $2.40/MMBtu range.
Traders warned of yet more operational flow orders (OFOs) likely to be called this weekend on PG&E's system because of unusually high inventory. The utility called OFOs on both May 31 and June 1 in an attempt to deal with low demand. PG&E's Kingsgate compressor, down for most of this week for turbine repairs, increased capacity to 2.36 billion cf/d on Thursday. Kingsgate should return to 2.52 bcf/d beginning June 10 as other compressor maintenance projects are completed.
In Canada, prices at the AECO hub slid throughout the week despite flow reductions on the NOVA system of about 1 billion cf/d. Traders said that cheap gas out of the Rockies continues to impact the Canadian market, and AECO fell from a high of $2.86/Gigajoule to $2.80/Gj by the end of the week. "[NOVA] is just bulging with gas," said one trader in pointing out the general lack of demand in Western markets [J.M.].
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