Western Price Survey
July 22, 2005
Transmission constraints and fluctuations in power-plant health proved to be the overriding factors that pushed the state's tenuous electricity supply-and-demand balance close to the brink of disruption late this week. On Thursday afternoon, with a relatively manageable system load of just above 44,500 MW, the California Independent System Operator declared a Stage 2 emergency for its Southern California territory.
System demand has yet to exceed last year's record peak of 45,597 MW, but Cal-ISO has been calling for stepped-up conservation in the state since last week. Weather variability and demand responsiveness have contributed to dampening power consumption in the state.
Nevertheless, with the loss of about 2,000 MW of supply in Southern California in a 24-hour period in the middle of the week, Cal-ISO quickly found itself in a situation in which supply reserves in San Diego Gas & Electric and Southern California Edison territories dropped below 5 percent--the minimum required to avoid a Stage 2 emergency. On Wednesday, Edison reported that it had reached a new peak-load record of 21,110 MW, around 300 MW more than the utility's previous record. On Thursday, in response to the Stage 2 Emergency, Edison and San Diego Gas & Electric shed load by activating voluntary curtailment programs.
The plants that tripped at midweek included Reliant Energy's 741 MW Ormond Beach Unit No. 1 and four AES generators in the Los Angeles Basin. Units No. 5 and No. 6 at the Redondo Beach facility removed about 350 MW from the grid when they tripped off line, and the shutdown of Alamitos Units No. 3 and No. 4 took another 670 MW of capacity off line.
The cost of power in the West appeared to slip in inverse proportion to the increase in pressure exerted on California's electricity system. Triple-digit pricing for peak-time power in California and the Southwest was the norm during the early part of the week, but costs dropped as the expectation that the peak-demand record would be broken went unmet.
Peak-power prices hit 113 mills at both Palo Verde and south of Path 15 at the beginning of the week, while Northern California power values trailed by just a couple of mills--reaching a high of 111.25 mills/KWh on Monday. Prices sagged a bit the following day, with SP15 power slipping to between 96.50 mills and 105.50 mills/KWh on Tuesday. NP15 power traded for between 95.50 mills and 104 mills/KWh that day. Daytime power costs both in California and at Palo Verde eased down to the high-seventies to mid-eighties during the latter part of the week.
Off-peak power prices in California hovered near 50 mills/KWh during the first two days of trading this week. The cost of NP15 power scheduled for weekend delivery peaked at 49.50 mills/KWh on Thursday, while SP15 power ranged between 44.25 mills and 49.75 mills that day. Still, next-week deliveries recorded gains on Friday, as the price of off-peak power at SP15 reached 65 mills/KWh and 59.50 mills/KWh at NP15.
Between the beginning of the week and Thursday's trading session, the value of daytime power at Palo Verde decreased by more than 35 mills. After a high of 113 mills/KWh on Monday, peak power at the hub attracted a low of 74.25 mills/KWh for weekend deliveries. Off-peak power at Palo Verde drew as much as 52.50 mills/KWh on Tuesday before dropping to a low of 40.50 mills/KWh on Thursday. By Friday the price perked up, closing out the week at 57.50 mills/KWh.
In the Northwest, the price for power stayed under the century mark. At Mid-Columbia, peak-power costs ranged between 65 mills and 80 mills/KWh this week so far, with both ends of that spread recorded in Monday trading. The cost of daytime power dropped down to the narrow range of 64.50 mills to 68 mills/KWh in late-week dealings.
Low-demand power at Mid-C attracted as much as 46.25 mills/KWh at the beginning of the week, but slipped to a low of 39.75 mills on Wednesday. Nighttime deliveries scheduled for early next week delivery at Mid-C drew 55 mills/KWh [Shauna O'Donnell].
Gas Cost Slips with Storage Surge
The price of natural gas wilted during the latter part of the week as storage numbers were released and hurricane-like conditions abated in the Gulf of Mexico.
The Energy Information Administration reported on Thursday that 59 Bcf of natural gas had been injected into underground storage facilities during the previous week, about 7 Bcf more than what market watchers had estimated. News of the greater stored amount pressured downward month-ahead gas costs, which lost about $0.25 in late-week trading.
The price of gas on the daily market followed suit, with most Western delivery points and producing ba-sins reporting prices below $7 on Friday. At Permian Basin, gas reached a high of $7.55/MMBtu on Mon-day, but by Friday had dropped down to between $6.95 and $7.15/MMBtu.
The value of gas at both the PG&E CityGate and Topock border locations slipped this week. CityGate gas traded for as much as $7.11/MMBtu on Monday but quickly fell into the $6 range. By the end of the week the price of CityGas gas had dropped to a low of $6.57/MMBtu. Topock gas also closed the week more than half a dollar less than Monday's price--opening the week at $7.18 and closing it at $6.45/MMBtu [S. O'D.].
Archives of the Western Price Survey for the past year are also available online.
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