Western Price Survey / Archives
June 16, 2000
California's second system emergency of 2000 drove spot power prices throughout the West to exceptional levels. While there was some question about how much volume was actually changing hands at prices up to 500 mills/KWh at bilateral markets, there was no denying that clearing prices on the California Power Exchange established historic benchmarks.
The CalPX daytime clearing price rocketed to a record 464 mills/KWh for Thursday deliveries with the top single-hour price reaching 663 mills/KWh. Even off-peak prices approached 100 mills during some hours and the Wednesday off-peak index of 86.4 mills was a new record price, as was the full-day index price of 355 mills June 15.
Those were unconstrained prices for day-ahead scheduling. Constrained prices varied significantly by transmission path, with Northern California lines' costs being pushed higher as a result of deration of the Pacific AC Intertie and Southwestern lines being depressed as traders tried to cram as much energy as possible into the state.
CalPX had just set several new price records during the May 22 emergency, but this week's day-ahead price points far exceeded those benchmarks.
Still, daily loads cleared by the Power Exchange have not come close to the 697 GWh peak established in August 1998. The highest CalPX load so far in 2000 was 628 GWh prescheduled for June 16.
Hour-ahead CalPX prices for Thursday and Friday mimicked the 750 mills/KWh limit seen on ISO imbalance energy and reliability service markets. That ceiling price was reached frequently midweek, but much less so by Thursday.
Markets throughout the region were drawn into price spikes. Power prices at Palo Verde/Four Corners and Mid-Columbia/COB moved upward in huge increments all week, with almost no overlap from day to day. At the peak of trading on Wednesday Palo Verde peak power was fetching 450 to 500 mills/KWh. COB and Mid-C had been over 400 mills/KWh. Off- peak trading was almost non-existent but prices on paper were anywhere from 60 mills to 80 mills/KWh.
The Bonneville Power Administration, which had been out of the surplus sales market since late-May found enough excess capacity to put 200 MW up for sale at CalPX constrained prices during peak hours through Friday. Nothing was available for Saturday.
The emergency appeared to be tempering late in the week. Traders said that power for Friday/Saturday deliveries was about half as expensive as it was the day before-putting it in the 200 mills to 250 mills/KWh range.
Hub prices were every bit as high, but volumes were relatively thin as utility schedulers tried with all their might to keep to their own resources or sell excess.
A grass fire in New Mexico proved problematic for utility schedulers in Tucson, Arizona, as the dual 345 KV Springerville line was sporadically up and down on Wednesday. The line carries 1,000 MW and serves as a conduit for power from both Springerville and Four Corners, so repeatedly losing the line meant a big headache for local schedulers who were forced to shed load at peak hours.
Problems were spreading into the Alberta Power Pool, which declared a firm load alert Wednesday as peak prices pinged to 995 mills [Arthur O'Donnell].
Up, Down, Up: What Will Tomorrow Bring?
For once, natural gas traders felt like bit players in the energy marketplace drama this week. Where gas prices have traditionally been one of the prime determinants of electricity costs, other factors were obviously driving markets during the latest California emergency. "I don't think gas prices matter anymore," one trader lamented.
That does not mean Western marketers were only waiting in the wings, but it was clear fuel prices were being set elsewhere-namely the NYMEX screen.
As NYMEX dropped midweek because of a lack of hurricane action in the Gulf, so did Western basin and border prices. Then, when NYMEX finally awakened to high electricity prices, it jumped some $0.20/MMBtu on Thursday, dragging the rest of the nation along with it.
The spread between high and low prices was quite broad this week and no one was confident there would be much stability heading into next week.
The Southern California Border price initially began the week at $4.82/MMBtu, dropped to $4.66 midweek, then rose again to about $4.85/MMBtu.
The variations at Permian Basin and San Juan hubs were not quite as wide but the trends were the same, with prices falling in the $4.08 to $4.22/MMBtu range at Permian and $3.94 to $4.04/MMBtu bracket at San Juan points.
In the north, demand for generation fuel mixed with the usual summer dearth of heating demand to bring mixed prices at Malin-from $4.11 to $4.33/MMBtu-and some operational confusion on the PG&E pipelines from Canada.
The Alberta index dived from $(C)5.05/Gigajoule to $4.84, but then climbed to $5.13/GJ on Thursday [Arthur O'Donnell].
California Survives Second Emergency of 2000; Forced Outages Hit Bay Area as Record Peak Set
For the second time in a month, the California Independent System Operator declared a statewide emergency June 13 and 14. High temperatures and a few key generation outages drove Cal-ISO into consecutive days of Stage One Alerts, but for Pacific Gas & Electric, the situation was the equivalent of a Stage Three emergency as the utility hit an all-time demand record of 23,361 MW on June 14.
In an unprecedented action, PG&E implemented rotating block outages to keep power demand in the San Francisco area from outrunning the system's ability to serve heat-related loads. Each block represents approximately 35,000 users; the utility reported about 97,000 customers were affected at some point during the hot afternoon as it tried to shave loads to keep the system in balance. Earlier in the day, PG&E began curtailing large customers who hold interruptible contracts, but as the day wore on it became apparent that more assertive actions would be necessary to prevent widespread outages and voltage instability.
Adding to the problem was an unplanned outage at the 739 MW Moss Landing Unit No. 6 on Tuesday afternoon, which also contributed to the Stage One Alert declared yesterday, as well as a reported outage at 325 MW Unit 6 at Pittsburg.
PG&E also resorted to customer curtailments on Thursday from noon to 6 pm in order to cut 300 MW and maintain voltage stability, but it was clear that the worst of the emergency had passed.
Meanwhile, Nevada Power reported hitting a new record peak at 5 pm Thursday. The utility said demand hit 4,434 MW, beating the prior record 3,993 MW set last July.
The PG&E peak had implications for Pacific Northwest power marketers who were trying to sell power into California. As part of standard reliability protocols, southbound capacity on the Pacific AC Intertie was limited once loads in the PG&E control area hit 20,850 MW. Beginning at noon on Wednesday, the AC line was cut from 4,200 MW to 3,950 MW. Cal-ISO said the deration was also called into effect during Thursday and Friday peak periods. Additional cuts limited import capability to about 3,200 MW on Thursday, Northwest sources said.
While it did not reach the system peak record of 45,884 MW set on July 12, 1999, Cal-ISO reported a top load of 43,630 MW Wednesday afternoon. Operators had been projecting peaks as high as 45,450 MW on Thursday, but diminishing temperatures reduced the threat.
The Sacramento Municipal Utility District also faced extreme heat, but its customer loads were well within the muni's ability to meet them. On Wednesday, SMUD came within about 100 MW of its all-time system demand level but did not need to call its "Peak Corps" load shaving program into effect.
Wednesday saw record temperatures in many California localities-for instance usually cool San Francisco topped 103 degrees F.
At peak on Wednesday, Cal-ISO reported that the average temperature in PG&E territory was above 102.3 degrees. That contrasted with a high of 86 degrees average in Edison territory and about 68 in San Diego.
As a consequence, power prices on the California Power Exchange and at bilateral hubs throughout the West were running at record or near record levels. At some point, traders stopped worrying about the cost and were only concerned with availability at any price [A. O'D.].
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