Western Price Survey
August 10, 2005
A little less than two months remains of the summer peak period for electricity demand in California. Though not out of the woods yet, the state has managed to have adequate power supplies during what many prognosticators said earlier this year would be a difficult, if not a downright dire, power-supply season.
So far this week the California Independent System Operator has recorded daily peak loads well into the 40,000-plus range yet this has caused little apparent strain on the state's power system. Even during July, when the grid manager had to declare a handful of "Flex Your Power Now" days and a couple of Stage Two emergencies, no forced outages were put into effect and the public was responsive to calls for conservation.
The price for power in the West reflects a summertime premium, but even more influential than the season or the temperature in any given location is the continuing strength and unpredictability in the price of natural gas. Oil costs have been leaning heavily on gas prices for the past couple of months and this week was no exception. The price of crude oil hit $65 per barrel on Wednesday after the US markets caught wind of possible tight supplies and high demand in coming months. Natural gas prices reflect this upward price trend, with Western gas costs hunkering down in the mid $7 to $8 range this week.
The price of natural gas-fired power in California opened the week in the low 80s, with peak power north of Path 15 trading for between 81.75 mills and 83.50 mills/KWh, and south of Path 15 for between 83 mills and 85 mills/KWh. By midweek, the price in both regions had slipped down to between 77 mills and 80 mills/KWh. Off-peak power in NP15 territory barely moved during the first three days of the week, clinging to a range of 49.50 mills and 52.75 mills/KWh. The cost of off-peak power at SP15 attracted nearly identical prices this week.
At the Palo Verde hub, power prices hovered just below the levels recorded in California. While the temperatures in the Southwest remain well above those in the Golden State, both Arizona and Nevada have cooled off significantly since the triple-digit mercury levels of a few weeks ago. Power costs at Palo Verde reflect this trend, with peak-time power at PV moving for about 10 mills less per kilowatt-hour than power in SP15.
After trading on Monday as high as 78 mills/KWh, daytime power supplies at PV drew between 70.50 mills and 73.50 mills/KWh on Wednesday. Nighttime power at the Southwest hub changed hands for between 45.75 mills and 48 mills/KWh during the first three days of this week [Shauna O'Donnell].
Archives of the Western Price Survey for the past year are also available online.
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