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Western Price Survey

June 24, 2005
Oil, Heat Push Up Western Power Costs

California regulators, power-supply analysts and crystal-ball gazers have been warning for some months now that power supplies could be tight in the state this summer. Tuesday marked the first day of summer, and while there is ample supply to meet load in the state, the cost of power on the day-ahead market is behaving as if megawatts are hard to come by.

One element driving up the price for spot power in the West has little to do with the supply-and-demand equilibrium, of course, and everything to do with fuel source. Thanks to the riding-the-coattails phenomenon, natural gas prices are rising in parallel with the price of oil. This week the cost of a barrel of oil topped $60 briefly, and generally settled in the vicinity of $59.

Also adding to the price pressure are a few outages at nuclear facilities. The facilities off line this week included the Columbia Generating Station and Unit No. 3 at the Palo Verde nuclear power plant. Columbia actually returned to service last week after a planned refueling outage, but went quickly off line again for repairs. On Thursday the Nuclear Regulatory Commission showed the facility at 20 percent output, indicating that it was ramping back up. Alas, on Friday the NRC Web site showed the facility back off line entirely.

The Palo Verde unit is so far having an easier time getting back into operation. After an ex-tended refueling and repair outage, the plant is being put back into operation. At the end of the week the NRC listed it as operating at 6 percent.

Rising temperatures are having an escalating effect on Southwest power costs this week. With the thermometer hitting 112 degrees in Phoenix, 90 degrees in Albuquerque and 91 degrees in Las Vegas, the region is gearing up for another sweltering summer. In fact, on Tuesday, Arizona Public Service reached a new peak-load figure for the Phoenix region.

Palo Verde power responded to the heat, with peak power trading for a high of 76 mills/KWh on Wednesday. Off-peak power at the hub ranged from 35.50 mills/KWh to 42.50 mills/KWh this week.

Southern California power costs lagged behind the Southwest by about 5 mills in trading this week. After opening on Monday between 60 mills and 64.50 mills/ KWh, peak-time power attracted a high of 72 mills/KWh Wednesday. By the end of the week the price had slipped back to around 62 mills/KWh. Low-demand power traded for 35.25 mills/KWh at the start of the week, but by Wednesday had gained another 5 mills in value. Friday saw the cost back in the 35 mills/KWh region.

As is typically the trend during the summer months, Northern California power drew a few less mills than power delivered south of Path 15. NP15 deliveries of peak power opened the week moving for between 57.25 mills and 62.25 mills/KWh. Following a midweek gain of a few mills, prices slipped down to between 54.50 mills and 58.75 mills/KWh Friday.

After starting off the week in the range of 50 mills to 52.50 mills/KWh, peak-time deliveries at Mid-Columbia slipped down to between 49.75 mills and 51.25 mills/KWh in Wednesday trading. The end of the week brought the shedding of a couple more mills off the peak price. Off-peak power in the Northwest remained steady much of the week, hovering between 31 mills and 34 mills/KWh. The spread widened on Friday, however, as low-demand power went for between 24 mills and 35 mills/KWh [Shauna O’Donnell].

Gas Prices Float Up, Lightened by Oil

Next-day receipts of natural gas are running at about $7 per MMBtu at Permian Basin, hovering near $6.75/MMBtu at the PG&E CityGate hub and between $6.78 and $6.96/MMBtu at the Southern California receipt point of Topock. The increase in the price of the commodity can be attributed to the escalation in the price of crude oil. This week saw the cost of a barrel of oil hit a record $60. No one seems to be able to predict what will happen next in the volatile--or, as Alan Greenspan has said, the "exuberant"--market.

The Energy Information Administration this week recorded a buildup in underground storage of 75 Bcf for the week ending June 17. The Weekly Natural Gas Storage Report also showed a correction from prior weeks. Not nearly as costly or significant as the correction the EIA posted last November, the total amount of gas in storage apparently had been off by 7 Bcf the past two weeks. Instead of 1,963 Bcf underground as of June 10, the Lower 48 actually had 1,956 Bcf stored. The amount increased to 2,031 Bcf with last week’s injection of 75 Bcf [S. O’D.].

Western Electricity Prices
June 20 - 24, 2005
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 10.51-797.17 9.96-57.88
Mid-Columbia 47-55 30-35
COB 49.50-57 27-39
NP 15 54.50-65.25 24-39.25
SP 15 55.75-72 35-44.25
Palo Verde 56.50-76 35.50-42.25

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

The Western Price Survey is excerpted from Energy NewsData's comprehensive regional news services. See for yourself how NewsData reporters put events in an accurate and meaningful context -- request a sample of either or both California Energy Markets and Clearing Up.

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Contact Shauna O'Donnell, editor with questions regarding Price Survey Content.

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