Western Price Survey / Archives
June 7, 2002
As the West entered the first true heat test of 2002, some things went according to plan while others posed interesting challenges for system operators. Brush fires brought down the DC Intertie at least twice this week and the Diablo Canyon nuclear plant on Monday stumbled on its way to full operations, but lots of generation that had been sitting on the sidelines moved back into service to capture somewhat higher prices in California and the Southwest.
From a pricing point, though, the big story was exceedingly low energy prices in the Pacific Northwest brought on by a glut of hydroelectricity. "Would you believe $1 American?" asked a Northwest trader on Thursday, reciting the low end of off-peak prices for Mid-Columbia deliveries on Friday and Saturday. "It almost went negative." Peak prices at Mid-C plummeted to the 4 mills to 6.5 mills/KWh range but off-peak energy was just 1 mills to 2 mills/KWh. By some accounts, those were the lowest NW prices in a decade and certainly the lowest since the Western grid was restructured in 1998.
In contrast, the previous day's Palo Verde prices topped 50 mills/KWh as temperatures in the desert Southwest moved to about 110 degrees F.
Wednesday marked the high point of the week in terms of California load and prices. The California Independent System Operator was delivering nearly 41,400 MW at about 2:30 pm, though the adjusted hourly peak came in at 41,000 MW. That was the highest load figure of the year and caused Cal-ISO to issue three consecutive "no touch" notices to generators. In response, the daily list of unit outages shrank significantly to less than 5,000 MW on Thursday as units that had been undergoing maintenance stepped up for duty. The outage list was dominated by refueling nuclear plants, with San Onofre No. 2 in the first phases of its month-long outage and Diablo Canyon returning from its hiatus. Restart was set back when the unit tripped because of feedwater pump problems, and the 1,100 MW facility was still climbing back to full output Friday morning at 90 percent.
As Diablo canyon was taken off the outage list, it was replaced Friday morning with 600 MW at two Alamitos units. Mainstays on the list included the 740 MW Moss Landing No. 7 and the 337 MW Morro Bay No. 3.
There was so much water flowing in the Northwest that the Columbia Generating Station has been held to 45 percent of capacity for at least the upcoming weekend. Bonneville Power Administration will tell operators when higher output is needed, but with prices so low and BPA offering 500 MW of surplus power every day, that might not be for some time. Generation at Grand Coulee was said to be up to 5,000 MW per hour.
Brush fires near Castaic in Southern California not only forced the DC Intertie to shut down briefly on Wednesday and for much of Thursday, they also caused further restrictions on the California/Oregon Intertie, which was limited to 3,000 MW.
That meant cheap NW power was trapped in the region. "We can't even get light load into NP15," lamented one seller. The NP15 off-peak price rose to 18 mills to 19 mills/KWh even though it had been down to 7 mills/KWh earlier in the week.
The high end prices seen Wednesday, up to 50 mills in the Southwest and 43 mills in California, receded to the 30 mills to 35 mills/KWh range as concerns about heat dissipated.
There were interesting events in Canada, with the Alberta Power Pool reporting its connections to British Columbia were severed repeatedly because of unspecified "external forces." One problem was the trip of 1,700 MW of hydro facilities at Revelstoke on Thursday, but that was a brief outage. Operators speculated the voltage excursions caused by the DC Intertie outage may have played a role [Arthur O'Donnell].
Gas Tops Out Early
Western natural gas prices tried to rally this week on expectations of hot weather, air conditioning demand and electric generation load, but after hitting a high point on Tuesday, the momentum died. With national price benchmarks in retreat after a bigger than expected injection figure was released by the Energy Information Administration, traders anticipate further erosion in prices. While temperatures were still high in the Southwest, the heat in California seemed to be getting displaced by cool ocean breezes.
Except for the San Juan Basin, which jumped by about $1/MMBtu over the course of the week, most trading hubs ended the week just about where they began. Topock at the Southern California Border climbed as high as $3.14/MMBtu Tuesday but gave back some to land at $3.03/MMBtu. The Permian Basin followed the trend, landing at $2.87/MMBtu, while San Juan held onto the $2.45/MMBtu level.
Malin centered in the $2.46 to $2.55/MMBtu range while the SF CityGate tracked between $2.58 and $2.72/MMBtu.
The Alberta market languished in the $(C)3.30 to $3.47/Gigajoule range, ending the week on a low note [A. O'D.].
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