Western Price Survey / Archives
July 14, 2000
One year ago this week, the Western power market was skyrocketing as utilities in Northern California experienced record-setting demand and the California Independent System Operator hit an initial landmark of load served. Prices climbed to the highest levels seen to that time. Palo Verde peaked at 100 mills/KWh while the California Power Exchange zoomed to the then-unheard-of prices of 73 mills to 82.5 mills/KWh for daytime deliveries.
This week, in contrast, weather was relatively mild, loads were well within manageable levels and prices started out over 100 mills/KWh in the Southwest, the CalPX hit 70 mills midweek and hour-ahead prices bounced as high as 90 mills/KWh.
That just shows the difference between last year, when hydroelectricity soon came to the rescue of overheated markets and this year, when water managers in the Pacific Northwest are still concerned about having enough to make it through the summer.
Also changed is the overall resource balance in the West, with constant load growth eating steadily into marginal capacity. Not to mention the continued reverberations of the three system emergencies so far this year that have kept power marketers on the edge-ready to jack prices higher with the slightest fear of shortfalls or promise of profits.
Another difference is the availability of CalPX block forward contracts meant to hedge risks of price volatility. On Thursday, CalPX reported its second highest volume day in history, largely because of a burst in BF trades that added 548 GWh of transactions to the daily market's 604 GWh volume. Combined with day-of trading, the CalPX total for the day was reported over 1,157 GWh.
Aside from the overall high price levels, hub prices around the region were at a premium to the California Power Exchange day-ahead averages. The Cal-PX bounced a bit early on-rising from almost 55 mills/KWh for peak power on Monday to 70 mills/KWh on Tuesday, but then settling between 62 mills/KWh to 65 mills/KWh for the rest of the week.
No single event appeared to be behind the bounce upward on Tuesday: some transmission limits were in effect on the AC and DC Interties and generation outages at the Mohave, Laramie Station and Colstrip coal- fired plants spread the impacts evenly through the West. On Thursday, a 530 MW Grand Coulee dam unit tripped offline.
Off-peak prices remain exceptionally high at 49 mills to 51 mills/KWh on the CalPX and up to 55 mills/KWh at Mid-Columbia. However, there appeared to be more supply available because Bonneville Power Administration was offering up to 300 MW round the clock at PX-indexed prices midweek. BPA tightened to peak-only offers for Friday and Saturday.
After starting higher, Mid-Columbia and California/Oregon Border prices eventually dipped below the Power Exchange clearing prices in the 55 mills to 61 mills/KWh range. Palo Verde was still between fell deeply to 65 mills to 70 mills/KWh. Those prices were much lower than the starting figures for the week: Up to 120 mills at Palo Verde, 90 mills at Mid-C and 75 mills at COB based on expectations of hot weather than did not pan out.
It was hotter than normal in Calgary. The Alberta Power Pool load exceeded 7,000 MW and prices frequently popped to the 500 mills/KWh level [Arthur O'Donnell].
After Diving on Storage report, Gas Prices Level Out
A higher than expected figure for new injections into storage pushed gas market prices off the edge midweek, but analysts soon resumed worrying about future supplies in the face of current demand. National benchmark prices turned around and started higher Thursday, although Western prices seemed less pronounced in their rebound.
The end result was another "choppy week of trading," in the words of one shipper. each week seems to pose a challenge in terms of gas price volatility and many have given up trying to predict the next turn.
"There's no fundamental story and I can't put together a compelling explanation" for the turnaround, said a source. Most traders just point to the NYMEX screen and follow along in the daily trades.
Price ranges spread widely, particularly at the Southern California Border, which moved from $4.60 to $4.75/MMBtu but appeared to gravitate to $4.71/MMBtu by the end of the week. San Juan Basin prices dropped from $3.90 to $3.68/MMBtu, while the Permian Basin showed a premium based on heavier Texas draws to meet incoming hot weather, in the $4.05 to $4.07/MMBtu vicinity.
Malin was described as "rock solid" at $3.93/MMBtu after the NYMEX fall and the PG&E CityGate hung tough at $4.40/MMBtu.
Alberta index prices fell and rose between $(C)4.66/Gigajoule and $4.75/Gj [A. O'D.].
Archives of the Western Price Survey for the past year are also available online.
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