Western Price Survey / Archives
June 15, 2001
Western power prices dropped into the 40 mills to 45 mills/KWh range throughout the West and last week's stable market conditions continued. While such fundamental factors as moderate weather, controlled demand and healthy generation are expected to last into next week, the big uncertainty will be water flows on Pacific Northwest river systems.
Over the past few weeks, the market has been stabilized by increased flows on the Columbia River due to snow melt and spill from federal dams to encourage fish migration. Though the spills have prevented Bonneville Power Administration from generating excess electricity, downstream generators have benefited. Some welcome rainfall this week also added to reservoir capacity and some key resources, including Grand Coulee are much closer to capacity than previously projected given the poor precipitation levels earlier this year.
The water situation is seen as temporary, however, and Northwest water managers made it clear that flows will decline significantly by this weekend in order to retain reservoir supplies for an uncertain summer. "The spring spill will stop by the weekend, and discussion will begin on whether there is enough water and money to spill this summer at lower Columbia dams for fall Chinook," reported one water watcher.
As the waters recede, power managers hope that a return to service at the Columbia Generating Station will make up for lost hydro generation. The nuclear unit is scheduled to return Sunday, June 17, but operators reported it was behind schedule by as much as four days.
Even if reduced hydroelectric availability starts to put pressure on power prices as expected, there may be a new wrinkle in the marketplace. Rumors out of Washington, DC, are that FERC will expand and extend its price mitigation plan to all hours and across the entire Western grid. Currently FERC's benchmark pricing plan covers only California and is in effect only when the California Independent System Operators has declared a staged emergency. There has been no formal confirmation from FERC, however, which has set a special meeting on June 18.
California Independent System Operator peak loads were steady at 30,000 MWh early in the week but jumped to 34,800 MW Thursday when Northern California temperatures rose. Still, there was no threat of emergency as the list of generation outages fell to just 4,440 MW, one of the lowest figures in a while.
At the highest levels, peak power in California and the Northwest reached about 60 mills/KWh while Southwest supplies were briefly as much as 70 mills to 76 mills/KWh. However, the continued downward pressure pushed those figures below 50 mills/KWh at all hubs.
Mid-Columbia, the California/Oregon Border and NP 15 all dropped to the 40 mills to 45 mills/KWh range heading into the weekend. Palo Verde, Four Corners and SP15 were seen in the 42 mills to 50 mills/KWh range. Though higher for peak periods, the southern prices were lower at night, still in the 25 mills to 29 mills/KWh vicinity [Arthur O'Donnell].
Gas Prices Vary in Uncertain Market
National benchmarks continued to erode on stronger than anticipated storage injections, but Western gas prices rose and fell on the whims of market expectations. In the end, though, the lack of demand from power generation coupled with high inventory on California pipelines to take back whatever price hikes were seen midweek.
The only areas that kept a straight-line performance were San Juan, which rose from a low $2.50/MMBtu to $3.17/MMBtu and the Rocky Mountain region, which had been so low last week it could only move up.
Otherwise, it was an up-and-down trend at Topock, where prices hit a high of $8.50/MMBtu Wednesday but dropped again to below $7.00/MMBtu. Permian Basin supplies swooped and fell in a range between $3.68 and $4.08/MMBtu.
Northern California was again beset by operational flow orders on the PG&E pipeline system. "It's OFOs everywhere," remarked one trader. No let up in the excess inventory situation is expected. "There's just no demand."
Prices at Malin and the SF CityGate bounced around between $3.85 and $4.50/MMBtu, ending on the low side Thursday. Alberta was also on a see-saw ride that went from $4.85 to $5.25/Gigajoule and back down again to $4.96/Gj [A. O'D.].
Archives of the Western Price Survey for the past year are also available online.
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