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Western Price Survey / Archives

June 21, 2002
SoCal Fires Recede, and NW Prices Deflate

Brush fires threatened California's power system this past week, causing temporary outages at two 500 KV transmission lines on the Midway/Vincent portion of Path 26 on Tuesday afternoon. Southern California Edison experienced a resource deficiency that required 800 MW of customer curtailments and 1,500 MW of emergency imports from the Southwest.

In order to keep the system in balance, the California Independent System Operator had to ask the Bonneville Power Administration to reduce southbound flows on the California/Oregon Intertie by a total of 500 MW. That also led to reductions in output at the Columbia Generating Station, initially to 85 percent of its 1,050 MW capacity, then down to 65 percent, where it remained Friday morning.

According to grid operators, though, the mess was over by about 6 pm Tuesday and loads and ratings were largely restored.

Late in the week, though, the Rodeo fire south of Four Corners were causing local electrical outages and possible gas delivery cuts. Arizona Public Service worried that the heavy smoke might cause problems on its high voltage lines running south toward Phoenix as Thursday's evening peak period approached. Though no serious problems were reported, there was an effect on Palo Verde spot power prices, which rose to 41.5 mills/KWh on Friday morning.

Aside from the disruptions caused by the fires, the power market was relatively stable. Continued high levels of hydroelectricity production in the Pacific Northwest pushed down prices in the region because the juice was unable to freely flow into California. Even though temperatures were hot in the Southwest, loads proved moderate and generation that had been sidelined for repairs made itself available for service. The exception was Unit No. 2 at Diablo Canyon, which was taken down to 55 percent on Wednesday morning for scheduled repairs to the steam generator. PG&E said the unit would be restored to full output over the weekend.

Still by Thursday, Cal-ISO had just 6,900 MW on its unavailable list with only 1,110 MW of that attributed to unplanned outages.

The net result of the week's activities was that prices hit their highest point on Monday, in the low- to-mid 30s everywhere but in the wet Northwest, then dropped and stabilized. Traders noted some slight firming of California prices heading into the weekend and suggested that a bump in natural gas prices might be the reason.

By the time the weekend trades were completed, the difference between prices in the Northwest and in California ballooned. Mid-Columbia prices dropped to 3.5 mills to 4.25 mills/KWh for peak periods and scraped the 2 mills to 3 mills/KWh range for off-peak. In contrast, The California/Oregon Border price rolled around the 20 mills/KWh mark and NP15 was stuck at 27 mills to 30 mills/KWh. Some of the cheap hydro seemed to be making its way southward at night, and COB off- peak slipped to around 8 mills while NP 15 eased to 9.5 mills and 12.75 mills/KWh.

Even though the Southwest has been holding onto 100 degree temperatures, prices were more contained than the Show Low fires.

Palo Verde topped 42.5 mills/KWh on Monday but slid to the 34.5 mills to 36.5 mills/KWh range for peak deliveries Friday/Saturday. Friday's trading saw the return of 40 mills-plus prices. Off-peak prices slid to 9 mills/KWh.

Despite the disruptions to service, SP15 peak power centered at the 32 mills/KWh while off-peak energy dropped to the 9 mills to 10 mills/KWh range [Arthur O'Donnell].

Gas Finds Late Strength, Then Collapses

The Western natural gas system appeared in a kind of equilibrium this week, with flows on pipelines relatively matched to demand from power generators and air-conditioning load. While national storage figures increased by 81 Bcf, according to the Energy Information Administration's weekly survey, net injection in the West was just 1 Bcf.

Prices in the region were up and down on a day-to-day basis but gathered strength on Thursday-only to collapse for weekend packages.. The biggest upward movement was seen at San Juan and Topock, while the Permian Basin price and the SF CityGate price stayed pretty much the same as in midweek trading.

San Juan prices continue to swing wildly, from a low of $2.03/MMBtu on Tuesday up to the $2.60 to $2.70/MMBtu range in late trading. Permian moved between $2.82 and $3.10/MMBtu almost every day, while Topock at the SoCal Border rose from a low of $2.98 to a high of $3.27/MMBtu.

Northern points were mixed. Malin stepped down to $2.27 on Tuesday, then climbed to the $2.57 to $2.70/MMBtu range later. The SF CityGate varied in the $2.67 to $2.90/MMBtu range.

The Alberta price covered a wide spread. After having been up to $(C)3.30/Gigajoule on Monday, the AECO index dropped to $2.90, picked up to $3.16, then broke all the way down to $2.15/Gj for Saturday supplies as the pipelines heading south began to overfill. Traders think the downward trend will spread into lower July contract prices [A. O'D.].

Western Electricity Prices
Week of June 17-21, 2002
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 8.8-376 5.29-17
Mid-Columbia 3-16 1.75-3
COB 17-28 8-8.5
NP 15 26.25-33 9.5-14.75
SP 15 32-37 9-12.5
Palo Verde 34.5-42.5 9-14

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


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