Western Price Survey / Archives
August 13, 1999
The spot power market was marked by low levels of trading activity and unseasonably low prices. Generally cooler weather and scattered rain storms pulled the rug out from under power sellers who found themselves caught with high fuel prices and August contract commitments at elevated prices-but almost no buyers.
Throughout the region, utility schedulers who usually need to buy extra power to meet summertime demand said they were more or less sitting out the market because they had plenty of supply-unit outages and minor transmission constraints notwithstanding.
The California Power Exchange wavered between 26.2 mills and 28.6 mills/KWh this week, dropping to the low end for Friday deliveries. Although daily scheduled loads climbed steadily through the week, daily 24-hour average prices fell to 23.5 mills/KWh.
The Pacific Northwest saw daytime energy prices step down to 16 mills to 18 mills/KWh from the 23.75 mills/KWh high point reached on Monday. The California/Oregon Border price fell to 23 mills from 27.5 mills/KWh over the course of the week.
The highest prices in the region were set at Palo Verde in the 33 mills to 34 mills/KWh range early in the week. However, by Thursday's trades, the lack of demand pushed bid prices below 29 mills/KWh. Outages at the 350 MW San Juan No. 1 unit and the 750 MW Four Corners No. 5 were reportedly ended by Thursday.
The only other resource event of note was a trip at Bonneville Power Administration's 550 MW Libby Power House on Thursday morning. The WNP-2 nuclear plant continued coasting down toward a mid-September refueling outage, leveling to 88 percent of capacity on Friday.
The PX off-peak price slipped from 18.75 mills on Monday to 15.25 for Friday. That helped send overnight prices down everywhere. The COB off-peak dropped to 14 mills and below 13 mills/KWh at Mid-Columbia. Palo Verde stuck at 17 mills/KWh.
Even though transmission repairs cut flows on the AC and DC Interties to 90 percent of their full ratings, there was available capacity between the Northwest and California-but few takers. "We had the opportunity to buy COB transmission, but we didn't bother," said a Canadian power seller. "At these prices, we'll just save it for another time."
The scheduled transmission work on the AC Intertie will clip north/south transfer capacity to about 4200 MW through September 3. Similarly, the DC Intertie will be curtailed to 2620 MW through September 3, with additional cuts to 2562 MW August 14-15 [Arthur O'Donnell].
Gas Continues Its Bull Run
With extreme heat and record utility loads moving from the Midwest into Texas, natural gas prices continued to rise this week, with some traders betting that the bull run will not stop until NYMEX prices crack $3/MMBtu.
The high price situation turned into a windfall for some California power generators, who sold off their excess gas supplies at premium prices. Relatively low utility loads and cool temperatures in the West meant that there was not much call for fuel in the region. Those who could redirect their committed supplies from generation to other buyers were able to get the best of both worlds, traders suggested.
With Texas demanding all the gas it could squeeze out of the Permian Basin, costs for delivery to the Southern California Border rose above $2.70/MMBtu and San Juan Basin prices trailed to $2.37/MMBtu this week.
The Canadian gas price crested at $3.29/Gigajoule on Thursday, then drifted down to about $3.23/Gj as Midwestern demand slacked off a bit. Trying to capture some of the less-than-demanding Northern California market Rocky Mountain gas delivered to Stanfield undercut the Canadian price-indicating little or no profit margin for sellers.
While the current prices are at their highest levels of the year, bullish marketers anticipate further increases, pointing to relatively low storage figures, oil prices above $30/barrel and expectation that the real summer weather for the West will be delayed. "We're in the middle of a bull run," said one marketer. "I think gas will go up to the $3.00/MMBtu range" [A. O'D.].
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