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Western Price Survey

July 14, 2006
California Heat Drives Late-Week Prices Skyward

The California Independent System Operator is planning ahead. On Thursday, the grid manager called a Power Watch for the following four days due to a persistent heat wave settling over the state and narrowing margins between supply and demand. Cal-ISO said it may need to call a Stage 1 emergency, or voluntary power reduction, sometime during the Friday-through-Monday period.

Although its Friday peak demand estimate fell from 46,283 MW to 44,424 MW on cooler weather in Northern California, Cal-ISO is still predicting booming demand for Monday, which could see a new peak record of 46,499 MW. The current record for the ISO control area of 45,431 MW was set last July 20th. As temperatures rose throughout the state on Thursday, demand in Cal-ISO's territory reached 44,655 MW.

Adding to the concerns of control-area operators is the ongoing conflagration in San Bernardino County. The Sawtooth Complex fire has burned 47,800 acres and dozens of residential and other structures. The fire, which is just 20 percent contained, is not currently affecting trans-mission lines or power supplies, but the volatile situation can change rapidly and may have a negative effect on the supply-and-demand equation in coming days.

One of the longer curtailments at a nuclear power plant in the West came to a close over last weekend as Palo Verde's 1,270 MW Unit No. 1 ramped back into operation. Excessive vibration in the unit's pipe system required it to run at just 25 percent for nearly six months. The unit was shut down and repairs were conducted in May and June. By the end of this week the plant was ramped up to 90 percent of full output.

The return of the Palo Verde unit was a welcome occurrence for facility operator Arizona Public Service and other owners of the plant, which will use the added megawatts to run air conditioners to offset rising South-west temperatures. On Thursday the mercury in Phoenix hit 109 degrees, and Las Vegas sweltered at 106 degrees.

In Southern California the price of power slowly ramped up to the upper sixties during the first three days of the week before shooting the moon in Friday's trading session. Peak-power prices hit 109.50 mills/KWh that day. Nighttime power cost between 34 mills and 37.50 mills/KWh at the start of the week, but traded on Friday for as much as 71.75 mills/KWh.

North of Path 15 transactions hovered just below the Southern California values. On Wednesday the price for peak power ranged from 63 mills to 65 mills/KWh, an increase of almost 10 mills over Monday's prices. With expectations of high temperatures going into the weekend, daytime power at NP15 traded for as much as 105 mills/KWh on Friday. The value of off-peak power at NP15 also swelled over the week. Pegged at a spread of between 34.50 mills and 37.50 mills/KWh on Monday, off-peak prices reached 69 mills/KWh on Friday.

The price for power at the Palo Verde hub this week slowly swelled heading into midweek. Opening on Monday trading for between 52.75 mills and 58 mills/KWh, peak power attracted as much as 66 mills/KWh the fol-lowing day. Riding the heat wave, power moved for between 87 mills and 103.75 mills/KWh at the end of the week. Off-peak power cost between 29.25 mills and 32 mills/KWh at the start of the week. The price closed on Friday at a high of 67.75 mills/KWh.

Northwest power prices swayed under the influence of California demand. While the weather in Washington was not exceptional, the price for power on Friday was. Peak power at the Mid-Columbia hub topped out at 73.75 mills/KWh, a gain of 10 mills over the previous day and about 30 mills more than Monday's price. Off-peak power at Mid-C moved for between 30.50 mills and 39.75 mills/KWh during the first four days of the week. On Friday the price soared as high as 58 mills/KWh [Shauna O'Donnell].

Western Gas Rises with Electric Demand

A heat wave in the West and a new record price for crude oil propelled natural gas costs in regional markets upward at the end of the week. Continuing political strife in oil-producing regions of the world pushed the price of a barrel of crude oil up to $76 on Thursday. Still, the price of gas in Western spot markets had a hard time breaking above the $6 mark for much of this week.

Gas delivered to the Southern California border point at Topock traded for between $5.20 and $5.88/MMBtu during the first three days of the week before stretching to $6.01/MMBtu on Thursday. Topock gas reached $6.19/MMBtu on Friday [S. O'D.].

Western Electricity Prices
July 10 - 14, 2006
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 39.91-405.99 11.62-48.20
Mid-Columbia 53.25-73.75 30.50-58
COB 46-83 32.50-62.25
NP 15 53-105 34.50-69
SP 15 53.75-109.50 34-71.75
Palo Verde 52.75-103.75 29.25-67.75

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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