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Western Price Survey / Archives

June 18, 2004
Power, Line Losses Spur Price Run-Up

A major loss of transmission-line capacity and the related shutdown of more than 4,000 MW of power in the Southwest early this week left grid operators scrambling to avert a cascading outage on the scale of last summer's blackout in the Midwest and Eastern United States and Canada (see story at [17]).

According to a preliminary report released by the Western Electricity Coordinating Council, at 6:41 Monday morning, Pacific Standard Time, a number of 500 KV and 230 KV lines in the Palo Verde area tripped, taking down all three units at the Palo Verde Nuclear Generating Station and a handful of gas-fired generation with them. Nearly all the transmission lines were back in service within a couple of hours, as were many of the generating units. As of Friday, the 3,810 MW Palo Verde facility was still down.

Predictably, prices throughout the West surged for Tuesday deliveries. Trades conducted Monday at the Palo Verde hub drew as much as 75.50 mills/KWh for peak-time delivery. Low-demand power attracted between 24.25 and 26.25 mills/KWh that day, but gained strength as the week wore on. Off-peak power scheduled for delivery on Wednesday and Thursday drew between 36 mills and 42.50 mills/KWh and rising to 446 mills/KWh for next week deliveries. Peak power costs at the PV hub had softened considerably by the end of the week, closing at 55.75 mills/KWh in Friday trading.

SP15 power prices also swelled in response to the outages. Peak power at the hub drew as much as 70.50 mills/KWh on Monday before slipping down to between 53.75 mills and 57.50 mills/KWh on Thursday. Off-peak power prices patterned themselves on PV prices, opening the week between 26 mills and 29 mills/KWh, climbed up to 42.25 mills/KWh on Tuesday, then shed a couple of mills in trading the rest of the week. Off-peak power deals made for next Monday delivery ratcheted upward to 47 mills/KWh.

With no estimate yet given by Arizona Public Service as to when the three Palo Verde nuclear units might return to service, even power prices in the Northwest rose. Mid-Columbia peak power attracted between 24 mills and 30 mills/KWh on Monday, but swelled up to a high of 46 mills/KWh the following day. Prices at the hub showed few signs of weakening during Wednesday and Thursday trading, peaking at 50 mills/KWh at midweek. Some slippage was seen in Friday dealing, as high-demand power prices dropped down to about 45 mills/KWh that day. Power costs in the Northwest were also generally buoyed this week by the slowing of the spring run off from rivers and the attendant tapering of hydropower resources.

Nighttime power in the Northwest was equally excited by the prospect of being in great demand. The low of 19 mills/KWh in Monday trading was but a distant memory by midweek, when off-peak power at Mid-C drew as much as 44 mills/KWh. For Friday deliveries, power at the hub changed hands for between 34.50 mills and 37.50 mills/KWh.

California-Oregon Border power peaked on Wednesday, reaching a high of 52 mills/KWh for peak-time deliveries. Low-demand power costs on the daily markets jumped up by as much as 20 mills between Monday and Thursday before settling at a range of 39.50 mills and 42 mills/KWh on Friday.

Aside from the sudden loss of the three Palo Verde units on Monday morning, power-generating facilities in the West were mostly in fine fettle this week. The California Independent System Operator's system-status chart recorded unavailable capacity for the week at an average of about 3,300 MW, with much of that attributed to planned outages.

Pacific Gas & Electric's Diablo Canyon No. 1 unit was finally back up to full power by the end of the week, following an extensive refueling outage and a very slow upward creep to its output over the last two weeks [Shauna O'Donnell].

Gas Costs Rise, then Level Out

Natural gas prices surged upward during the first part of this week on expectations of high demand from electricity generators. By Friday, however, the price for the commodity had dropped off a bit at both the supply basins and delivery points in the West.

The cost of spot gas was also driven upward in tandem with a hike in the futures price on the New York Mercantile Exchange. Following the lead provided by petroleum-based products, deals for next month's natural-gas supplies traded for as much at $6.62/MMBtu in end of week exchanges.

Deliveries of gas to Southern California drew as much as $6.25/MMBtu on Thursday, after opening the week at a low of $5.18/MMBtu. At Malin, the price of natural gas stayed below the $6.00 mark, topping out at $5.84/MMBtu on Thursday [S. O'D.]. [S.O'D.].

Western Electricity Prices
June 14 - 18, 2004
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 11.82-94.35 10.50-79.38
Mid-Columbia 24-50 19-44
COB 39.50-53 25-41
NP 15 54.50-68 29-47.25
SP 15 53.75-70.50 26-47
Palo Verde 45.25-75.50 24.25-46

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


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