Western Price Survey / Archives
August 4, 2000
With California experiencing four consecutive Stage Two Alerts-and barely escaping involuntary curtailments-hourly prices of 500 mills/KWh became the norm during peak afternoon hours on the California Power Exchange all this week. With one exception, prescheduled and hour-ahead market prices appeared stuck at the psychological barrier posed by the limits on California Independent System Operators market purchases. The exception occurred during hour- ahead bidding on August 1, when the CalPX clearing price rose to as high as 647 mills/KWh for a single peak hour and 520 mills/KWh in the subsequent hour. Though rare, this indicates CalPX prices are not necessarily constrained by the Cal-ISO caps.
Daytime prices on the CalPX day-ahead market followed a classic bell curve. From a starting point of 370 mills Monday, they rose to a peak of 399 mills Wednesday and fell to 329 mills/KWh for Friday deliveries. Off-peak power similarly went from 78 mills to 110 mills and back down to 86.8 mills/KWh.
While trading at bilateral hubs mainly followed the CalPX leader, prices in surrounding regions drove even higher on Tuesday. At their highest, prescheduled blocks at Mid-Columbia hit 525 mills/KWh, California/Oregon Border prices zoomed to 450 mills and Palo Verde reached 530 mills/KWh. Individual hours were even higher, with unconfirmed reports of 1,000 mills/KWh deals to meet load.
Those prices came off substantially by Friday, with Mid-Columbia and COB dropping to about 200 mills and Palo Verde sitting at 245 mills to 270 mills/KWh. Off-peak prices were still in the 85 to 100 mills range, traders said.
Though very hot weather was widespread in the region, only Nevada Power reported setting a new demand record. The Cal-ISO had forecast a possible new peak on Wednesday, but the combination of load-shedding and an afternoon rain storm in the south quelled load and the threat of a Stage Three Emergency. Still, Cal-ISO was above 42,000 MW each day, meaning it had to scramble to find resources. Ironically, Cal-PX loads dropped through the week, indicating utilities were pushing load into real-time procurement, making the ISO's job all the more difficult.
On the other hand, utilities came through with their absolute maximum in terms of load-shedding under voluntary curtailment programs. Southern California Edison called on its full 2,400 MW commitment, PG& E brought in 500 MW and San Diego added its full 40 MW of demand relief. Cal-ISO also had to depend on special arrangements with the Pacific Northwest. Bonneville Power Administration sent extra power down the Intertie and stood ready to sacrifice precious salmon, if needed, to help California.
After a full week of constant loading, generation units and transmission facilities were showing stress. Thursday's Stage Two was evidently triggered by the loss of an unidentified 400 MW unit in the San Francisco Bay Area.
Other resource problems contributed to the squeeze. Because of an explosion last Friday, July 28, Grand Coulee Dam in Washington was short one powerhouse-dropping its generation capacity by 1,100 MW. Another powerhouse was temporarily out over the weekend but lasting damage to a transformer continues to limit output.
BPA shuffled its resources deck all along the Columbia River and made arrangements with customers to free up as much generation as possible in the event California moved into a Stage Three Emergency.
In the Southwest, Four Corners No. 4 dropped off line but No. 5 returned to about 90 percent of capacity. Operators hoped No. 4 would be back in service Thursday night [Arthur O'Donnell].
Power Generation Drives Gas Loads
Price trends may be set by distant market, but there was no denying that high prices for electric power generation added to the natural gas market dynamic this week. Southern California Gas reported a record summer send out of 4 billion cubic feet on Tuesday, August 1, rivaling figures set for winter gas use.
The all time high for SoCal Gas deliveries was 5.3 Bcf in December 1990, according to the company. This week's high point was similar to a heavy winter day, however.
Most price points responded to the change of month as well as adverse reactions to the weekly AGA storage report. Though net injection was only slightly less than expected, analysts have continuing concerns that low storage now will translate to scarcity later.
Traders reported double-digit price increases almost everywhere except Malin after the AGA numbers were released. Even after the dust settled, prices at the SoCal Border didn't, showing instability in the $4.69 to $4.77/MMBtu range on Thursday.
The Alberta index price rose steadily through the week from $(C) 4.22/Gigajoule Monday to $4.64/Gj on Thursday [A. O'D.].
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