Western Price Survey / Archives
July 30, 1999
Even as utilities in the Midwest and East tried to hold together their systems in the face of deadly heat, sustained record loads and spot prices running up to $2000/MWh, the West was a relative island of calm. Power prices at all hubs held steady or gravitated toward a middle ground occupied by the California Power Exchange. The PX daytime clearing price broke out of its narrow bidding range of 30 mills to 31.6 mills to fall to 28.13 mills/KWh for Friday bids.
As the week and month ended, the wide spread of prices seen midweek- from a low of 25 mills at Mid-Columbia to 37 mills at Palo Verde- narrowed considerably. Pacific Northwest prices rose slightly and Palo Verde/Four Corners deals slipped to stand as bookends to the middle- ground California/Oregon Border price. The overall Western range ran from 27 mills to 30.25 mills/KWh.
However, with higher than normal Western temperatures projected into next week and natural gas fuel prices still climbing, traders were not betting on prices staying at such moderate levels for long. The next week is expected to start where August futures contracts ended-in the 40 mills/KWh bracket.
Relatively costly off-peak power was the surprise of the past week on the electricity side of the market. Traders said the trend was driven largely by moderating river flows now that most of the winter snow pack has melted. Major California hydroelectric reservoirs remain at above normal levels but power managers have adopted the strategy of reserving releases for peak periods and potential hot weather later in the summer. Although off-peak energy remained relatively high at 20 mills to 22 mills/KWh, traders noted a slippage in pricing for combined Friday/Saturday trades.
In the Northwest, water power managers have the luxury of load shaping to maximize revenues now that they've worked through the heaviest run- off period. Additionally, Bonneville Power Administration pulled out of the surplus sales market on Wednesday and was reportedly buying substantial quantities of off-peak power. Earlier in the week, BPA's off-peak surplus sales offer hit the unusually high price of 25 mills/KWh but it had no overnight energy to sell into the weekend.
In resource news, last Friday's output dip to 84 percent at Palo Verde No. 3 was a transient affair. Late this week, WNP-2 began coasting down towards a refueling outage set for September 18. The plant was reported at 94 percent on Friday morning [Arthur O'Donnell].
Gas Market Goes a Little Crazy
Western gas prices climbed to the highest prices of the year-even higher than winter peaks-this week as Midwestern power generation demand pulled supplies in Texas and Canada away from California pipelines. Gas traders blamed the steep rise in NYMEX screen prices and end-of-the-month balancing activities for adding even more pressure to the market.
"It's not really loads in the West," one trader responded when asked why prices were so high, "a better answer is NYMEX and balancing."
The Southern California Border price rose to $2.63/MMBtu to match pace with the Henry Hub national benchmark.
As Permian Basin supplies were diverted to serve extreme demand in the Midwest, prices there rose to $2.54 and the San Juan Basin price followed at $2.28/MMBtu.
Canadian prices also reached the unseasonable peak of $(C) 3.01/Gigajoule midweek, testing new pathways between Alberta and Chicago end-users. As a result gas prices flowing into California took a hike to $2.25/MMBtu at Malin, Oregon.
Although the Midwestern market was expecting to cool down somewhat, gas sellers pointed to weather forecasts for the Southwest that predict hotter-than-normal temperatures into next week-meaning that the high price trend could be extended based on power generation loads [A. O'D.].
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