Western Price Survey / Archives
July 16, 1999
After a record-breaking start, Western power markets took a deep breath and ducked beneath the waters of high prices and loads set earlier in the week. Triple-digit temperatures throughout the region spurred peak demand for transmission and electricity on July 12. After the California Independent System experienced a new record for transmission demand at 45,884 MW and several Northern California utilities set new peak records, the latter part of the week seemed as if it belonged to a whole different month.
Prices started off at very high levels, even before the extent of power loads was evident, but then fell substantially. The California Power Exchange led the way with daytime averages climbing from 73 mills to 82.5 mills/KWh before dropping to 30.5 mills/KWh for Friday deliveries.
Individual hours on the Power Exchange prescheduled market hit a clearing price of 153 mills/KWh and Day-of-Market prices climbed to 200 mills/KWh during a few peak period hours. Besides PX hourly loads reaching as much as 34,500 MW, the supplemental power market gathered bids for as much as 1,000 MW additional on Wednesday.
California/Oregon Border and Palo Verde prices spent the first part of the week in a wide range of 50 mills to 70 mills/KWh, except for a singular spike to 100 mills/KWh in the Southwest on Tuesday morning. By the end of the week, however, COB power fell across a range of 26 mills to 30.25 mills/KWh and Palo Verde dropped into the 30 mills/KWh vicinity.
The Northwest market operated on a wholly different track. Mid- Columbia energy stuck in the 20 mills to 25 mills/KWh tier despite the heavy market activity to the south, then dropped as low as 16 mills/KWh for Friday/Saturday deliveries.
In resource news, the WNP-2 nuclear plant returned to full capacity on Monday. Whether it remains at 100 percent until its scheduled refueling outage in September will be determined by regional power demand. Operators are prepared to reduce generation to about 67 percent to conserve fuel for peak needs.
Unit 19 at Grand Coulee Dam has been experiencing exciter problems, but the 650 MW unit was reported back in service mid-week. Pacific Gas & Electric saw two of its 280 MW generation units at the Helms pumped storage facility drop off-line late on Tuesday, but by then the peak demand was easing and capacity was available elsewhere.
While the transmission record set by the California Independent System Operator was accompanied by congestion on import lines from the Pacific Northwest and along Path15, the constraints were not severe [Arthur O'Donnell].
Gas Markets Look Elsewhere
In contrast to the week's highly volatile electricity market, natural gas trading was relatively calm and prices followed national trends rather than regional activity. While Southwest basin prices rose during the week with the NYMEX screen, the Southern California Border price held steady and Canadian gas lost a few cents on delivery prices.
With forecasts for moderate weather to come next week, demand appeared to be slipping and traders did not have great expectations of price increases.
The SoCal Border price hung between $2.36 and $2.40/MMBtu, while San Juan and Permian Basins rose and fell between $2.05 and $2.12/MMBtu. The Permian price maintained a bit of a premium over the New Mexico prices, but the spread was on the order of $0.03/MMBtu.
In Northern markets, the Malin delivery price showed the most movement-ranging between $2.18 and $2.21/MMBtu before falling to $2.14/MMBtu late in the week.
The Alberta Index barely moved at all, traders said. While some transactions went for as low as $(C)2.66/Gigajoule and as high as $2.74/Gj, the index price held at $2.67/Gj by Friday [A O'D.].
Electric Use Hits All-Time Highs in Scorching Northern California
The Summer of 1999 left its mark on California's utility record books when state-wide transmission use exceeded 45,000 MW on July 12, coinciding new all-time power demand figures for several Northern California utilities.
The coincident transmission demand number on the California Independent System Operator's big board hit 45,884 MW at 4:30 pm on Monday, just two hours after Cal-ISO operators declared a Stage One Emergency asking for voluntary conservation measures by power users.
The previous record of 44,927 MW was set on August 3, 1998. Cal-ISO director of communications Pat Dorinson said operators knew they were on the way to a new record early in the afternoon. Luckily for the transmission system, there were no major generation outages reported and only minor constraints on critical transmission paths, he said.
Cal-ISO's ancillary services market got a workout, with prices for reserve capacity hitting the $250/MW cap during numerous hours in the early part of the week. The peak load patterns proved to be a one-day affair as loads moderated beginning on Tuesday. Power markets throughout the region eased over the week as loads and prices fell.
With temperatures reaching 115 degrees F on Monday afternoon in several locations, Northern California residents and businesses turned on their fans, air-conditioners and other cooling appliances in record numbers: * Pacific Gas & Electric displaced its all-time high figure for power delivery by clocking 23,128 MW of customer load at 5 pm on Monday. PG&E's previous record high was 23,031 MW-also established last August 3. * The Sacramento Municipal Utility District hit 2,759 MW, surpassing the 2,586 MW figure reached August 4, 1998. * The Northern California Power Agency's dispatch center also managed a new all-time peak demand of 721 MW-the record set last year was 705 MW-and several individual NCPA members contributed with new peaks of their own. Among the biggest increases was attributed to the city of Roseville, which jumped to 237.5 MW due mainly to load growth from residential and business customers. According to NCPA, Healdsburg and Ukiah also set new use records in their localities.
NCPA's Al Parsons said the power pool had no difficulties matching the heavy demand by its members and it was able to assist the Cal-ISO meet reliability needs by turning on its backup combustion turbines for additional generation.
The exceedingly hot weather spread throughout the Southwest, but rain and lightning storms across the region put a lid on utility demand 1999 Summer Peak Records Utility
Date California ISO
7/12/99 (prior record)
8/3/98 Pacific Gas & Electric
8/3/98 Sacramento (SMUD)
8/4/98 NCPA Pool
8/4/98 Nevada Power
7/17/98 [A O'D.].
NYMEX Considers Mid-Columbia Futures Contracts
The New York Mercantile Exchange (NYMEX) announced this month that it is considering adding a fifth product to its portfolio of electricity future contracts, one based on transactions at the Mid-Columbia trading hub. Mid-C is a more-or-less hypothetical location, based on four substations that serve as receipt and delivery points north of the Columbia River system in Washington state (see CEM No. 508 [14.5]).
If approved by the NYMEX board, Mid-C would take its place alongside electric futures pioneers Palo Verde and the California-Oregon Border (COB) contracts and newer pacts at Cinergy and Entergy hubs in the Eastern US.
According to NYMEX, the Mid-C contract will differ from others in terms of unit size. The Mid-C monthly pact would be for 432 MWh of firm power (1 MW per hour for 16 peak hours per business day) compared to 864 MWh for PV and COB and 736 MWh for the Eastern contracts.
While electric futures have grown in use by the industry and speculators, the total volume of contract trading is lags behind NYMEX products for natural gas and other energy commodities. Recent figures indicate about 785 COB contract change hands weekly, with 3,734 total "open interest" contracts outstanding through November 1999. Palo Verde saw 648 contracts taken out in the most recent week, with 4,091 total open interest. Of the Eastern contracts, the Cinergy pact is proving more popular-trading about 700 per week, with between 1,400 and 1,600 open interest contracts.
Observers noted that volume trading in the Western futures dropped substantially with the opening of the California Power Exchange and has not recovered since.
Western power traders expressed mixed feelings about the addition of a Mid-C contract, particularly because of its close proximity to COB. Some felt that the timing for a new contract is not right given the new California Power Exchange block forward market and other rival products. A few suggested that Mid-C trading might exhibit wheeling constraints and higher transaction costs if widely used. Others were both supportive and skeptical. "I think it will be great, but a huge headache," one trader said [A. O'D.].
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