Western Price Survey / Archives
August 11, 2000
California's power market was unusually calm and emergency-free this week, although the California Independent System Operator kept its fingers on the alert button just in case some resource outage tipped the market supply balance.
This being the first week of operations under the newly restored $250/MW price cap, traders tried to gauge the impact but could not separate out moderate demand from the price equation. While imbalance and real-time markets hit the limit for a few hours on Wednesday and Thursday afternoons, there was no real test of the tighter limits.
The trend for prices throughout the West was generally downward all week, except for a Friday clearing price bounce on the California Power Exchange. When the CalPX day-ahead price had dropped to 120 mills/KWh for Thursday, traders took it as a signal that things were settling down and most hubs were moving down to the 120 mills to 125 mills/KWh vicinity for the weekend. But when the market cleared for Friday deliveries, the CalPX daytime price had moved back up to 175 mills/KWh.
There was no real explanation for the bounce, as scheduled loads were lower than on the previous day. The biggest disruption in the market was the repeated loss of Colstrip units way up in Montana caused by a fire and transmission line outage. The double-circuit 500 KV Garrison/Broadview line was interrupted by fires on Wednesday afternoon. Information was sketchy, but Bonneville Power Administration reported damage to smoked out conductors and melted aluminum spacers.
The outage reportedly tripped three Colstrip units. They returned to service but at minimum capacity, and about 700 MW of Colstrip power was diverted along a 230 KV path, according to BPA. Repair crews were on the scene, but the lines could be out "for the foreseeable future," according to a Reuters news article Thursday evening.
Earlier in the week, Four Corners No. 5 and the Fort Nelson station in British Columbia each experienced ups and downs of a temporary nature.
Western power prices hit their high notes on Monday, with Southwestern hubs reaching up to 230 mills/KWh. Mid-Columbia and the California/Oregon Border were just shy of 190 mills/KWh at the start of the week. By late Thursday, though, there were few transactions reported and prices settled to about 125 mills at COB and Mid-C. Some real-time prices were quoted above 150 mills in the Northwest after the Colstrip news became widespread.
There was confusion over water release regimes this week. It had appeared there was more hydro generation as a result of a decision to spill water and fish at McNary Dam, and BPA was able to offer more energy for sale during off-peak hours midweek. According to observers of the weekly "fish versus dam managers" meetings, though, the sentiment appears to be to hold back on releases because next week may see another load crisis in California. Be that as it may, Cal-ISO has prepared a pending alert for the August 11-15 period, suggesting there might be operational deficiencies. The possibility looms of a "no touch" day notification to make sure all resources are available during the period-which just happens to coincide with the Democratic National Convention in Los Angeles [Arthur O'Donnell].
Up, Down and Sideways Movement Seen in Gas Markets
Asked whether the prevailing trends in natural gas pricing were up, down or stable, one trader this week responded, "Yes, that's all true." Mixed signals were the order of the week as diminishing threats of hurricane activity in the Gulf Coast and a somewhat stronger than expected gas injection report brought an initial spike to prices Wednesday, followed by deflation and lackluster trading.
Spicing up things in the West, however, were an oversupply situation in the Alberta gas fields and an "over pull" alert on the El Paso pipeline in the Southwest that forced shippers to go to market to balance their takeout.
Given the "wild swings" reported in market pricing on Wednesday, the rest of the week seemed sedate. Southern California Border prices settled at $4.77/MMBtu, San Juan inched up to $3.53 and Permian was $4.35/MMBtu.
Malin eased down from $4.30 to $4.20/MMBtu and the PG&E CityGate rested at $4.56/MMBtu.
Because of apparent abundance of supply coming in from the fields, the Alberta price plummeted from $(C)4.56 to $4.09/Gigajoule by the end of the week.
Traders hitched their britches to the future, expecting another burst of hot weather in California next week will bring added demand for fuel and higher prices [A. O'D.].
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