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Western Price Survey / Archives

July 30, 2004
Cool Weather Deflates Electricity Prices

The heat wave that was expected to sweep through California during the early part of the week and push peak loads well above the new records set last week failed to materialize. Seasonal, fairly unremarkable temperatures remained the norm this week, and as anticipation of hot weather and high demand faded, so did the price for power on the spot market.

After opening the week at between 68.75 mills and 71 mills/KWh, the peak-time price for power at SP15 sagged to between 60.50 mills and 64 mills/KWh for end-of-week deliveries. The typical trading-for-next-week-delivery boost did appear on Friday, when peak power traded for as much as 68 mills/KWh. Power costs north of Path 15 also shed value this week. On Monday, NP15 high-demand power attracted between 64 mills and 67 mills/KWh. Power for Friday delivery changed hands for between 53.50 mills and 59.50 mills/KWh.

Off-peak power at NP15 drew as much as 46 mills/KWh on Monday and managed to stick close to that figure throughout the week. Nighttime power at SP15 also did not lose any value over the course of the week, sticking to the mid-forties. By Friday, next week's off-hours deliveries garnered as much as 53.50 mills/KWh.

As in other regions of the West, power prices in the Southwest took a hit as traders realized that prices would not be hanging ten on a heat wave this week. Palo Verde peak-demand prices drew between 59.50 mills and 64 mills/KWh on Wednesday, down from a high of 71 mills/KWh reached on Monday. Prices for next-week deliveries did not even manage a significant bump up, cresting at just 65.25 mills/KWh.

Off-peak power prices at Palo Verde moved little during much of the week. Opening on Monday at a range of 40 mills to 41 mills/KWh, electricity trades added just another mill or so later in the week. Still, exchanges for next Monday delivery did surge up to a high of 51 mills/KWh on Friday.

Not having to bear the burden of an expected jump in temperatures, the price for power in the Northwest displayed little volatility this week. California-Oregon Border power stuck close to the 61 mills/KWh mark for peak power during the first half of the week, slipping down to 56.50 mills/KWh for late-week deliveries. Low-demand power at COB attracted between 47 mills and 48.50 mills/KWh on Monday before shedding a couple of mills in Wednesday and Thursday trading.

Having anticipated peak load to hit about 46,000 MW on Monday, the California Independent System Operator's actual realized peak demand of 43,243 MW was well below that level. On Thursday, Cal-ISO's peak-load figure did not even break 40,000 MW, topping out at 38,791 MW.

With plenty of capacity to go around as well, little pressure was exerted on prices from the supply end of the supply-demand equation. AES' Huntington Beach Unit No. 3 was down all week on a forced outage, but most other large units in Cal-ISO's control area were healthy. Two facilities in Mexico, the 309 MW La Rosita unit and the 600 MW TermoElectrica facility were curtailed on Tuesday but quickly returned to full service.

Capacity availability in the West experienced the biggest hit on Wednesday, when the 790 MW Unit No. 2 at the Mohave Generating Station was taken off line unexpectedly. It remained idle the rest of the week [Shauna O'Donnell].

Gas Dips, then Rebounds a Nip

Plotting the price of natural gas at Western basins and delivery hubs this week would produce a relatively shallow inverse bell curve. As if tracking the realization on the electricity side of the energy markets that a forecast heat wave was not going to materialize, natural gas prices sagged in the middle of this week before making an incremental climb during the last two days of the week.

At the Southern California border, gas traded for as much as $6.00/MMBtu on Monday, slipped to between $5.70 and $5.87/MMBtu on Wednesday, then moved back up to about $5.90/MMBtu in Friday trading. The same pattern was seen at both the Permian and San Juan basins. At San Juan, gas moved for as much as $5.58/MMBtu early in the week, shed about 20 cents by midweek, then closed out on Friday at between $5.37 and $5.43/MMBtu.

The Energy Information Administration reported injections of natural gas totaling 70 Bcf in underground storage facilities for the week ending July 23, and a total amount in storage of 2,297 Bcf. This exceeds last year's figure at this time of year of 2,062 Bcf [S. O'D.].

Western Electricity Prices
July 26 - 30, 2004
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 10.86-488.42 11.03-84.13
Mid-Columbia 53-62 44.75-57
COB 56-65.75 44.75-58.50
NP 15 57.75-67 40.25-56
SP 15 60.50-71.50 40.25-53.50
Palo Verde 59.50-71 35-49

Archives of the Western Price Survey for the past year are also available online.


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