Western Price Survey / Archives
August 18, 2000
The story behind this week's four consecutive days of Stage Two emergencies is still difficult to discern. Some obvious points include 100-degree temperatures in California's desert communities leading to higher than anticipated loads at a time when Cal-ISO said up to 2,200 MW of generation was unavailable because of mechanical failures. Exactly which units were involved remains a mystery, although speculation centered on the Huntington Beach, Redondo Beach and Alamitos power stations in Southern California Edison territory.
If true, the location of the outages caused even more stress on the system, loading transmission lines SP15 and P26 to the maximum. because of hydro conditions in Northern California, there have been import constraints on the AC and DC Interties.
The current heat wave in California and the Southwest is not an extreme one-no record temperatures were recorded, for example. The problem lies in the extended heat, with the current high pressure system landing on California last Friday and lingering for six days running.
Cal-ISO found itself readjusting forecasts and adjusting actual loads higher once the numbers were all in. The high point of the week appeared to be on Wednesday afternoon, with loads reaching 44,457 MW, according to Cal-ISO.
The system operator's job is being made more difficult by needing to secure increasing amounts of power each day as prescheduled loads clearing the California Power Exchange seem to diminish in response to the utilities' determination to pay no more than 250 mills/KWh-which corresponds with the Cal-ISO's price cap of $250/MW for imbalance energy.
For example, on Wednesday afternoon's Hour 15 (3 pm) when the peak was hit, the Cal-PX had previously cleared only 28,926 MW on the day-ahead market, 897 MW of incremental supply on the hour-ahead and 321 MW of decremental demand, totaling just 30,144 MW. With system load hitting 44,457 MW, that meant operators had to dig up about 14,300 MW. Rumors circulated that an "out of market" (OOM) call resulted in paying prices far in excess of the cap, but Cal-ISO would not confirm.
When the utilities relented to accept a higher CalPX price on Tuesday afternoon at 5 pm, the 498 mills/KWh clearing price on the hour-ahead market elicited 1,451 MW of additional supply and 1,758 MW of decremental demand. While analysts are still mulling the import of such numbers, the implication is clear that lower prices lead to reduced bids and more stress for system operators.
Outside of California, some utilities approached or surpassed record loads. Public Service Company of New Mexico hit a new peak of 1,318 MW on Tuesday, adjusted for increased wholesale loads.
Prices throughout the region wavered but remained at a high plateau. The CalPX day-ahead price moved between 185 mills and 207 mills/KWh for daytime power and 65 mills to 90 mills/KWh for off-peak.
Mid-Columbia and California/Oregon Border prices stuck fairly close together in a range of 157 mills to 200 mills/KWh, with off-peak mostly between 70 mills and 81 mills/KWh. Mid-C and COB ended out at 157 mills to 165 mills for Thursday peak. Palo Verde and Four Corners were above 210 mills most of the week until they also fell to the 167 mills to 175 mills range. Trading was reported very light throughout the West, though.
Midweek saw a blip in output from the Columbia Generating Station, down to 90 percent of capacity. On Thursday, though, operators determined that the safest course of action would be to take the unit down to 60 percent to prevent possible scram is a pump seal blew out. One of two seals broke on Saturday and while that did not force an outage, operators took the cautious approach in order to maintain operations until a less stressful period when they can shut the unit and repair the seal [Arthur O'Donnell].
Low Storage Drives Prices Higher Everywhere but San Juan
With storage injection figures coming in lower than anticipated, natural gas prices throughout the US and Canada jumped by double- digits-everywhere except in the San Juan Basin. It appears that increasing curtailments on the El Paso pipeline system into Southern California are shutting gas in the basin and leaving producers with excess supplies.
Gas traders frequently play on spreads and this week, the differences in pricing between hubs became the major point of interest. San Juan, for instance, fell as much as $1/MMBtu behind prices at Permian Basin and more than $1.50 below the SoCal Border. Even at Topock, there was a widening gap between prices into the SoCal Gas system and into Pacific Gas & Electric's. SoCal Topock ended the week at about $4.91, while deliveries to the PG&E connection were $4.41/MMBtu.
As gas in Northern California and Canada pushed higher following the American gas Association's weekly storage survey, the Malin price climbed from $3.90 to over $4.30/MMBtu before settling a few cents lower. The spread between Malin and the PG&E CityGate halved during the course of the week.
The Alberta price took off like a rocket, moving from $(C) 4.15/Gigajoule at the start of the week to as much as $4.78/Gj Thursday. The index price settled at $4.67/Gj [A. O'D.].
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