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Western Price Survey

July 21, 2006
Power Prices Balloon on Hot Weather

Record-breaking electricity demand and a weather forecast of extreme heat on Monday and Tuesday sent power prices into orbit on Friday.

The week was a volatile one for power prices. The California Independent System Operator reported record demand Monday of 46,561 MW, which exceeds by 1,130 MW the record set last July 20. Demand did not abate much throughout the week, but unlike last year's record demand period, Cal-ISO did not have to declare any system emergencies. Cal-ISO spokesman Greg Fishman attributed the ability to meet demand to a number of factors, including increased flows of hydro power. He also said utilities are now scheduling 97 to 98 percent of their load, and noted that conservation also helped.

Whether the Cal-ISO can keep system demand in check next week, however, remains an open question. Hot weather gave strength to power prices on Monday, but they dipped mid-week before exploding on Friday trading as the National Weather Service predicted extreme heat in California for Monday and Tuesday. Peak prices at Palo Verde, South of Path 15, and North of Path 15 all surpassed 200 mills/KWh Friday. Last year, on then-record demand, Cal-ISO declared a Stage 2 emergency, but prices did not surpass 100 mills/KWh (see CEM No. 832 [9]).

South of Path 15 peak power sunk to a low 88.50 mills/KWh Tuesday then inflated to 220 mills/KWh for Monday deliveries. Off-peak power was also volatile, trading between 41 mills and 44 mills/KWh most of the week before the spread ballooned between 65.25 mills and 99 mills/KWh Friday.

Palo Verde followed the trend. Peak power went as high as 109 mills/KWh in Monday trading, slid to 90.25 mills/KWh the very next day, then rose to 200 mills/KWh in Friday trading. Nighttime power reached a low of 35.75 mills for Friday deliveries, then blasted to 67.75 mills/KWh for Monday deliveries.

Daytime power at the California-Oregon border steadily climbed. It started the week between 83 mills and 90 mills/KWh before finding a zenith of 100 mills/KWh for Monday deliveries. Off-peak power was priced between 40 mills and 49 mills/KWh most of the week before it rose to between 65 mills and 90 mills/KWh in Friday trading.

Mid-Columbia daytime power gained strength as the week progressed. It traded between 72 mills and 79 mills/KWh Monday and finished the week between 87 mills and 120 mills/KWh. Nighttime power went for about 45 mills/KWh Monday, 60 mills for Friday deliveries, and 63.50 mills to 80 mills/KWh for Monday deliveries.

Transmission and generation outages were few this week. Notable unplanned outages included the 741 MW Unit No. 1 Ormond Beach plant, and the 682 MW Unit No. 7 Pittsburg plant, though capacity there was curtailed only by 137 MW Thursday. The Columbia Generating Station ramped down briefly Thursday morning to replace an adjustable speed control device for a water pump, but was back up to 100 percent capacity Friday.

Cal-ISO is predicting another hot day, and a high-demand day, for Monday. "We're only midway through a major heat wave that began last week," Cal-ISO Vice President of Operations Jim Detmers said in a press release [Chris Raphael].

Natural Gas Prices Keep Cool

The U.S. Energy Department reported that an additional 59 Bcf of natural gas moved into storage in the Lower 48 states last week from the previous week, bringing stocks to 2,763 Bcf, which is 25.5 percent above the five-year average. Eight Bcf of the additions went to the West. Permian Basin natural gas reached a high of $5.97/MMBtu for Friday deliveries. San Juan Basin gas reached $5.69/MMBtu, also in Thursday trading. Southern California border gas traded at a high of $6.15/MMBtu on Monday and again on Thursday, but prices slipped in Friday trading comfortably below $6/MMBtu. Gas at the PG&E CityGate traded between $5.95 and $6.12/MMBtu Friday after starting the week as high as $6.35/MMBtu [C.R.].

Western Electricity Prices
July 17 - 21, 2006
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 36.26-548.84 32-86.70
Mid-Columbia 72-120 37.75-100
COB 82-106 40.50-90
NP 15 88-220 40-99
SP 15 88.50-220 41-99
Palo Verde 90.25-200 35.75-67.75

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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