Western Price Survey / Archives
June 25, 2004
As the week wore on, low demand and ample supplies took their toll on Western power prices. Still, as there was little activity in the region to drive price movement, the downward slide in power costs was a slow descent over the course of the week, rather than a dramatic drop. The return to health of all three units at the Palo Verde Nuclear Generating Station increased available capacity in the region by more than 3,000 MW, thereby removing any significant scarcity premium from the cost of wholesale electricity on the day-ahead market.
Another nuclear unit, Diablo Canyon No. 2, was curtailed by about 50 percent of its 1,100 MW output late last Sunday. The electricity-generating unit kept to that level for much of Monday before ramping back up to full power on Tuesday. The ramp-down was due to scheduled maintenance on the cooling-water intake system. By Thursday, the Nuclear Regulatory Commission status report showed all nuclear facilities in the West operating at full power.
In the Northwest, the continuing squeeze on hydro output has kept prices at Mid-Columbia afloat during the last couple of weeks. Last week, power costs at the hub drew as much as 50 mills/KWh for peak-time power. Prices slipped from that level and were running in the high forties early this week, with a high of 49 mills/KWh reached on Tuesday. Friday deliveries were changing hands for the week's low of 43 mills/KWh, but tacked on a mill for next week's deliveries. Low-demand power on the spot market at Mid-C drew as much as 42.25 mills/KWh, also on Tuesday, before sagging to between 34 mills and 36.25 mills/KWh on Thursday.
California-Oregon Border power prices stayed close to the 50 mills mark in trading during the early part of the week. Peak power opened the week within the narrow range of 51 mills to 52 mills/KWh before sloughing off 2 to 3 mills in Wednesday deals. The price of power for end-of-week deliveries weakened to between 47.75 mills and 48.50 mills/KWh. Off-peak power at COB hit a high of 42.50 mills/KWh on Tuesday before wilting to a low of 34.25 mills/KWh on Thursday. Off-peak packages were moving for as much as 41 mills/KWh on Friday.
With the return to service of the three Palo Verde units, Southwest power prices were unable to come close to last week's high of 72.50 mills/KWh. Rather, peak power at the hub consistently traded within the range of 48.50 mills to 53.50 mills this week. Off-peak power at the hub exhibited very little volatility for much of the week as well, ranging from 32 mills/KWh on Monday to a high of 35.75 mills/KWh for Thursday deliveries. However, low-demand power at Palo Verde changed hands for between 41.50 mills and 42.50 mills/KWh for next-Monday delivery. The gain was driven by triple-digit temperatures in Arizona.
South of Path 15 power changed hands, but hardly anyone noticed. The spread went from 54 mills to 55.50 mills/KWh on Monday, expanded to between 52.50 mills and 54.25 mills/KWh on Tuesday, and managed to inch up to 55.75 mills/KWh on Wednesday. Still, Friday deliveries were moving for between 52.50 mills and 53.50 mills/KWh, with a handful of trades recorded as low as 45 mills/KWh. The spot-market price for low-demand deliveries South of Path 15 drew between 36.50 mills and 39.50 KWh this week, but soared to 45 mills/KWh for next-week deliveries traded on Friday.
Wednesday had system operators in Idaho Power territory scrambling to mitigate the effects of transmission outages, the cause of which were not immediately known. In separate incidences, two 230 KV lines tripped that afternoon. About 180 MW of generation was lost, forcing the utility to call a NERC Alert 2, which was escalated to Alert 3 at 4:25 pm. Idaho Power shed 170 MW of firm load and constraints on its transmission system significantly reduced import capacity. The alert was cancelled at 7:00 pm Wednesday, and the two lines were scheduled to be back in service by midnight on Thursday. California's grid system did not feel any effects from the event [Shauna O'Donnell].
Little Demand, Less Movement
Natural gas prices on the spot market exhibited little volatility this week. The lid was kept on the cost of the commodity by low demand in the electricity-producing sector and seasonal temperatures across the land.
At the Southern California Border, gas traded for between $5.68 and $6.00/MMBtu much of the week before sinking to $5.50/MMBtu on Friday. Further north, at the PG&E CityGate delivery point, gas traded for as much as $6.08/MMBtu, but generally staying in the vicinity of $5.90/MMBtu.
The cost of gas at the producing basins also showed little aptitude of significant movement this week. Permian gas moved for between $5.60 and $5.80/MMBtu most of the week, though some deals attracted as much as $6.05/MMBtu on Thursday.
The Department of Energy's Energy Information Administration reported an injection of 85 Bcf into underground storage last week, bringing the total in storage up to 1,845 Bcf. This is nearly 300 Bcf more than last year at this time [S. O'D.].
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