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Western Price Survey / Archives

July 3, 2002
Manic Monday Gives Way to More Mellow 4th of July for traders

The power market had something for everyone despite a holiday-shortened trading session. Desert heat brought on new peak loads for utilities in Colorado and New Mexico on Monday. Mid-day transmission curtailments wrecked previously arranged power delivery schedules and pushed the California Independent System Operator's imbalance energy prices to the limit for four hours. And the continuing glut of hydroelectricity held Northwest power prices so low that there were reports of excess energy being sold for the price of transmission.

While major fires continued to burn in Arizona and Colorado, lines of containment appear to be holding, and the threat has been diminished to a major 500 KV transmission line feeding Phoenix. Beginning last Friday evening, Arizona Public Service and Salt River Project had to de-energize the lines from Cholla and Coronado for much of the weekend to allow firefighters to do some protective back burning. When service was restored on Sunday, utility officials said that the direct threat to transmission from the massive Chediski/Rodeo fire had subsided.

As traders and schedulers put together their deals ahead of time to work around the mid-week July 4th holiday, the worst of the desert heat seemed to be receding and prices edged down. They could not fall much further in the Pacific Northwest, where Mid-Columbia peak period prices were in the 2.25 mills to 6 mills/KWh range all week and off-peak was pinned at 2 mills to 3 mills/KWh-essentially the cost of transporting it within the region. Bonneville Power Administration was offering up to 800 MW of surplus power each day, and operators at the Columbia Generating Station pulled the nuclear unit down to 45 percent of capacity.

The low prices in the Northwest reflect the lack of transmission capacity for export, a situation that was made worse on Monday because of electrical problems at the north end of the DC Intertie that forced curtailments to 1,490 MW heading south and 1,430 MW going north. Things improved on Tuesday, but the Western Electricity Coordinating Council said the DC line will be between 2,550 MW and 2,680 MW through the holiday. Those cuts, in turn, forced variable limits on the AC Intertie as well, ranging between 3,000 MW to 3,500 MW through July 8, said WECC.

The curtailment of the DC line on Monday coincided with a drop in output at the Diablo Canyon nuclear facility, where No. 1 slipped to 85 percent of output. Cal-ISO had to enact another "no touch day' to maintain enough reserves and transmission.

For four consecutive hours on Monday afternoon, the Cal-ISO imbalance energy price hit the peak of 91.87 mills/KWh. For a brief period, Cal-ISO's reserve margin dipped below 5 percent but no stsaged alert was called.

Prescheduled prices were not so extreme, although the difference between Northwest and California prices was substantial. California/Oregon Border peak prices were in the 22 mills to 23 mills/KWh range Monday but slipped to the 11 mills to 18 mills/KWh range for the holiday. Off-peak was around 6 mills/KWh.

The NP15 price was still in the 35 mills to 36.5 mills/KWh vicinity, down from 38 mills/KWh. Off-peak remained at 17 mills/KWh.

SP15 slipped from above 41 mills to the 36 mills to 39 mills/KWh range on Tuesday. Off-peak was holding on to 15 mills/KWh. Palo Verde held to the 39 mills to 46.25 mills/KWh range for peak power and 15 mills/KWh for off-peak. Deliveries to Mead were somewhat higher priced, especially during off-peak hours.

Temperatures in the Southwest have been a bit above normal, but utilities report the high humidity has not yet kicked in, keeping loads within normal bounds. Still, new peak records were established at Public Service Colorado, Tri-State Generation & Transmission and the Platt River Power Authority. The utilities were still finalizing their numbers, but PS Colorado said it hit 5,904 MW on Monday.

Tri-State's unadjusted demand for its 44-members was 2,131 MW on Monday, but the system exceeded that point on Tuesday afternoon, reaching 2,140 MW. Both figures far outstrip the previous 1,879 MW record set last year. Even if the new numbers are adjusted downward by 5 percent to reflect actual billings, it is expected that a new record will stand.

Despite that high level of load, Tri-State had about 350 MW of surplus generation to sell to others. For instance, in recent months, Tri-State completed two new combustion turbines at the Brighton Generating Station, located at Denver International Airport. About 70 MW of that power is sold to PS Colorado.

Platt River declined to release its figures, but confirmed that it had exceeded the previous record load of 511 MW.

Arizona and Nevada utilities were not seen approaching their records-at least not this week. Nevada Power was about 100 MW less than its record 4,395 MW set a year ago and SRP was about 370 MW shy of its 5,164 MW record also set July 2, 2001.

Tucson Electric had set a new demand record on June 26 or 1,900 MW, but this week's loads stayed about 100 MW below that figure

Next week, the San Onofre Unit No. 2 should be back in service after its refueling. On Wednesday, the unit was reported at 23 percent of capacity [Arthur O'Donnell].

Few Takers for Northern Gas

The weakest links in the natural gas market this week appeared to be Alberta and Malin, where prices sank to extreme lows. Desert heat and record electrical demand for some Southwestern utilities kept a floor under the prices at the San Juan and Permian basins, and the Southern California Border price held above $3/MMBtu during Tuesday's trading. With the 4th of July holiday approaching, though, trading activity was drying up and prices were expected to fall further.

With Malin prices already down to the $1.16 to $1.30/MMBtu level, any further erosion might bring costs down to less than $1/MMBtu. The AECO index dropped to $(C) 1.09/Gigajoule [A. O'D.].

Western Electricity Prices
Week of July 1-5, 2002
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 8-90 5.25-6
Mid-Columbia 2-6 2-3
COB 18-23 6-6.5
NP 15 34.75-36.5 17
SP 15 37-41 15-17
Palo Verde 39-46.25 14.5-15

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


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