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Western Price Survey / Archives

July 9, 2004
Power Fades on Weekend Weakness

With demand exerting little pressure on the price of electricity in Western markets, power trading during this holiday-shortened week maintained an appearance of tranquility. Power was readily available throughout the region and the only semblance of price movement was attributable to the uptick in natural gas prices.

Even a fire in Phoenix that damaged an Arizona Public Service substation and led the utility to urge its customers to conserve, could not manage to drum up anything resembling a supply scare this week. The huge fire at the Westwing Substation started Sunday evening, destroying a handful of transformers and cutting the area's available supply of electricity by about 20 percent (see story at [17]).

Despite the fire in the Southwest, the price of peak power at Palo Verde sagged from a high of 56.75 mills/KWh on Tuesday to between 49 mills and 51 mills/KWh in Thursday trading for weekend delivery. Off-peak power at Palo Verde attracted as much as 36.25 mills/KWh at midweek. By Friday, when deals were exchanged for power to be delivered next Monday, low-demand power at the hub was moving for as much as 43.50 mills/KWh.

SP15 power packages drew as much as 58.75 mills/KWh for midweek deliveries, before dropping down to a range of 52.75 mills to 54 mills/KWh for weekend supplies. Off-peak power costs peaked at 40.50 mills/KWh for deliveries this week, but attracted as much as 46 mills/KWh for next-Monday deliveries.

At NP15, power prices trailed slightly behind Southern California prices. Daytime power on the day-ahead market drew between 54 mills and 56.50 mills/KWh early in the week, before drooping to 49.25 mills/KWh for weekend packages. Power for nighttime deliveries garnered between 37 mills and 40 mills/KWh before skipping up to a high of 46 mills/KWh for next-week deliveries.

The California Independent System Operator recorded peak-demand levels close to 39,000 MW on Tuesday, but load levels dropped by as much as 3,000 MW for the rest of the week.

In the Northwest, Mid-Columbia power continued to anchor the low end of the region's price spread. Hitting a high of 44 mills/KWh in Tuesday trading, the cost of peak power at the hub slipped to a low of 37 mills/KWh the following day. Off-peak power at Mid-C attracted 39 mills to 40.50 mills/KWh on Friday, after opening the week between 34.50 mills and 35 mills/KWh.

As for this week's power plant health, two 790 MW Mohave Generating Station units began the week off line, but by midweek, just Unit No. 2 remained out of service. Ormond Unit No. 1 ended the week on an unscheduled outage, with all 741 MW of capacity curtailed. Reliant's Coolwater Station No. 3 spent much of the week generating about 50 percent of its 245 MW capacity.

All of the nuclear units in the West were operating at full output this week. Overall, Cal-ISO's tally of unavailable units listed few major power plants out of service. On Thursday, a mere 2,395 MW of generation was listed as being unavailable in the Cal-ISO control area [Shauna O'Donnell].

Gas Surges, then Slips

The price of natural gas in the West moved upward throughout the week, though the run-up was not easily attributable to any particular factor. Demand in the region did not especially swell this week on weather fundamentals. Instead, traders attributed the rise in prices to a hike in the commodity's cost on the NYMEX. Both producing basins and delivery hubs saw an increase in gas costs.

Opening the week at between $5.69 and $5.84/MMBtu, Permian Basin gas drew as much as $6.00/MMBtu on Thursday for next-day deliveries. In New Mexico, at the San Juan Basin, the cost of gas hit $5.49/MMBtu in late week trading before fading to a low of $4.91/MMBtu for weekend deliveries.

Meanwhile, at the Malin hub, a similar pattern could be seen. Trades on Tuesday attracted between $5.44 and $5.485/MMBtu, before gaining an additional 20 cents the following day. The price dropped as low as $5.21/MMBtu for weekend packages traded on Friday. PG&E CityGate gas exceeded $6.10/MMBtu during the middle of the week before sinking to between $5.58 and $5.66/MMBtu for end-of-week deals.

The Energy Information Administration recorded an injection of 109 Bcf of gas into underground storage last week, bringing the total amount in storage up to 2,047 Bcf. While Eastern storage figures remain slightly below the five-year average, the West has 287 Bcf in underground storage, about 3 percent more than the average [S. O'D.].

Western Electricity Prices
July 5 - 9, 2004
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 8.54-291.31 7.52-143.61
Mid-Columbia 37-44 34-40.50
COB 41-48.25 35.50-41.50
NP 15 49.25-57.25 37-46
SP 15 52.75-61 35.50-42.75
Palo Verde 48.50-56.75 33-43.50

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


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