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Western Price Survey

June 16, 2006
Western Power Costs Push Upward on Warming Trend

Power costs on Western spot markets shot up toward the end of the week, leavened by the continuing warm weather throughout the region.

Peak power in the Southwest jumped up to a high of 68.75 mills/KWh at the end of the week after spending the prior four days closer to the 50 mills/KWh mark. The spread for nighttime power at PV was just about 5 mills over the first half of the week, with a high of 18.75 mills/KWh recorded on Tuesday. The spread remained pretty narrow at the end of the week, but the actual prices ranged from 40.25 mills to 46 mills/KWh.

The value of power in the South of Path 15 region lost about 10 mills compared to the start of last week. While last Monday's peak power price topped out at 65 mills/KWh, the price range at the start of this week was pegged at 51 mills to 55.25 mills/KWh. Still, the hub price managed to recover some ground on Friday, when peak power cost as much as 64 mills/KWh at SP15. The off-peak power price at SP15 topped out at 41.75 mills/KWh heading into the weekend for power scheduled for delivery early next week. The cost of nighttime power at the hub generally kept to the teens in the early part of the week.

The supply of power into the California Independent System Operator control area was ample throughout the first half of the week. The most notable outage listed by the grid manager was the Palomar Energy Center. The full capacity of the 541 MW gas-fired facility was off line Tuesday for unplanned reasons, while most other unit ramp-downs were for scheduled reasons. Still, even Palomar was not able to put much of a dent in the supply-and-demand equation, returning to full service on Wednesday. The following day, the Cal-ISO chart recorded no unplanned outages or curtailments of greater than 50 MW.

In Northern California, traders dug into their wallets for between 49 mills and 53 mills/KWh on Monday before slipping down to a range of 41.50 mills to 51 mills/KWh the following day. By Wednesday the price had eased down to between 44 mills and 49.25 mills/KWh. Weekend deliveries moved for between 47.25 mills and 61 mills/KWh on Thursday. Friday trades remained near that level. Low-demand power in the North of Path 15 delivery region cost between 13.50 mills and 17 mills/KWh at the start of the week. Trades generally stayed within that range during the Tuesday and Wednesday trading sessions. At the end of the week, nighttime power attracted as much as 41 mills/KWh.

The Mid-Columbia price for daytime power ranged from a low of 16.50 mills/KWh at the beginning of the week to a high of 34.25 mills/KWh on Friday. The midweek price split the difference, coming in at between 24 mills and 27.25 mills/KWh. The off-peak price at Mid-C hit a high of 11 mills/KWh on Friday. This figure was a far cry from the single-digit numbers recorded earlier in the week. Nighttime power at the hub attracted as little as half a mill on Thursday.

Electric utility crews have been watching wildfires scorch rural and urban areas of Arizona this week, but so far damage to transmission lines has been limited and outages minor.

The Potato Complex wildfire that started on June 6 near Heber and Overgaard, two communities northeast of Phoenix, worried officials of Arizona Public Service and Salt River Project, the two electric utilities serving Phoenix.

The utilities cut power for the safety of firefighters and to prevent smoke from causing a line to trip off.

SRP shut off power to the 500 KV line that runs from Coronado Generating Station at St. Johns near the northeastern border with New Mexico to the Silver King Substation near Superior, which is 60 miles east of Phoenix.

The utility took the Coronado-Silver King line out of service during parts of three days, said SRP spokesperson Scott Harelson. "We had enough capacity in the rest of our system to make up for the loss of that line," and customers in Phoenix did not encounter outages, he said.

Some of the capacity from the 700 MW Coronado coal-fired plant was sent over alternative lines when fire was creating a hazard, he said.

The Potato Complex fire also created risk for APS, causing the utility to cut power to the 500 KV transmission line that links the Cholla power plant near Holbrook and the Saguaro plant north of Tucson.

"Not having that Cholla-Saguaro line has not created any service issue [in the Phoenix area]," Mark Fallon, APS spokesperson, said. The Cholla-Saguaro line was re-energized the night of April 15. Then, the Woody fire threatening the outskirts of Flagstaff at midweek caused limited damage to a 69 KV distribution line, but was quickly extinguished, Fallon said.

The wildfires are being blamed on a continuing drought in the region. The January-May runoff season was the second driest in Salt River Project's 103-year history. SRP said one wet year, 2005, was not enough to end an 11-year drought [Shauna O'Donnell and John Edwards].

Gas Prices Swell with Power Prices

The price of natural gas on the spot market rose this week as power demand swelled and the cost of gas on the futures market rose.

The New York Mercantile Exchange traded July gas at Henry hub for $6.59/MMBtu on Wednesday, up about 10 percent from last week's price. With the exception of the San Juan producing basin, gas at receipt points and other producing regions in the West traded for in excess of $6/MMBtu at the end of this week.

Southern California gas delivered to the Topock border location moved for between $5.57 and $5.75/MMBtu on Monday, dipped to $5.49/MMBtu the following day, but headed up to a high of $6.20/MMBtu heading into the weekend.

At the border with Oregon, Malin gas closed out the week changing hands for as much as $6.05/MMBtu, a gain of more than $0.50 over the Monday spread between $5.28 and $5.40/MMBtu.

The rise in gas costs compared to last week was attributed as much to trader nerves as to the weather. The Energy Information Administration reported injection into underground storage of 77 Bcf for the week ending June 9. While current stored supplies of 2,397 Bcf exceed the five-year average by close to 38 percent, the injection was less than anticipated and jumpy traders gazing into the future pushed up the cost of both future gas and spot gas [S. O'D.].

Western Electricity Prices
June 12 - 16, 2006
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 18.57-182.31 10.76-134.81
Mid-Columbia 16.50-34.25 0.5-11
COB 34-48.50 4-26
NP 15 41.50-61 13-41
SP 15 44.50-64 12.75-41.75
Palo Verde 49.75-68.75 13.50-46

Archives of the Western Price Survey for the past year are also available online.


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