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Western Price Survey / Archives

August 25, 2000
BPA on Losing End of Power Sales

Limited nuclear generation, reduced hydroelectric production and intermittent transmission connections plagued the Bonneville Power Administration all week. The worst period was Tuesday afternoon, when the 500 KV Garrison/Broadview transmission lines in Montana had to be de-energized as wildfires again threatened.

BPA was already short of capacity because the Columbia Generating Station has been limited to about 59 percent of output all week and river flows were lower than normal. When 1,000 MW of Colstrip coal power was cut off, it not only put BPA close to a system emergency but also pushed the California Independent System Operator into a Stage One Alert.

While things resolved with the return of the Colstrip connection Tuesday night, BPA is still forced into expensive purchases to meet demand. The agency is reportedly buying between 1,000 MW and 1,500 MW at peak every day through the end of the month at prices between 200 mills and 250 mills/KWh. The tab for the month of August could exceed $70 million, according to Northwest sources.

Western prices remain inflated, even though overall loads are moderate and weather has not been extreme. The California Power Exchange clearing prices bounced between 192 mills and 234 mills/KWh for daytime deliveries and moved from 83 mills to 133 mills/KWh for off- peak power.

The sustained off-peak premiums were an unwelcome novelty in a market that continues to surprise veteran traders. About the only relief for buyers was that congestion on lines entering California from the Southwest pushed zonal prices down to 35 mills to 85 mills/KWh.

Peak prices at bilateral hubs were various degrees above 200 mills. Even on Thursday, Palo Verde was between 220 mills and 230 mills/KWh, the California/Oregon Border ranged from 230 mills to 250 mill/KWh range and Mid Columbia showed 245 mills to 260 mills/KWh.

Even though the Cal-ISO appeared to be having an easier week than last when it confronted repeated system emergencies, grid operators still spent much of their time squeezing out additional supplies to meet load. A stand-off in Power Exchange markets, with utilities refusing to pay more than 250 mills/KWh for supply and bidders unwilling to offer at prices much below prevailing market trends, continually pushed unmet load into Cal-ISO's lap.

For instance, for the 4 pm peak hour on Thursday, when system load barely topped 40,000 MW, only 28,022 MW had been clear on the CalPX day-ahead market and a scant 448 MW on the day-of market-leaving Cal- ISO with a 11,533 MW deficit and short notice. At times of stress, such as Tuesday afternoon, Cal-ISO is forced into its "out of market" mode, willing to pay prices beyond the supposed caps just to make sure the lights stay on. In this particular case, it could not even turn to the Northwest because 1,000 MW of imports had been cut.

The problem has become chronic, and even federal regulators have noticed. This week, the Federal Energy Regulatory Commission directed Cal-ISO to start forecasting peak loads in advance and use forward contracts to secure reliable power. The Cal-ISO board called an emergency meeting for Friday morning to discuss the "underscheduling" problem and possible solutions.

Despite all of BPA's problems this week, it has decided to led Cal-ISO a helping hand when resources are tight. According to a change to Cal- ISO operating protocols, "BPA has agreed to reduce spill on their river systems (water presently being bypassed) and increase Generation in the like amount. They will supply that Energy or capacity to the CAISO in an attempt to avoid firm customer interruption within the CAISO Control Area."

There was no description of when the emergency spill reduction actions could be triggered, and the Cal-ISO notice apparently went into effect August 9-although it just became public information this week [Arthur O'Donnell].

El Paso Cuts Drive Prices to Extremes

National markets may have moved on storage reports or fears of hurricane-induced disruptions, but the West had its own problems to deal with this week following the explosion on El Paso's pipeline between West Texas and California.

By Thursday, El Paso had restored only 150 MMcfd of flows along the southern route and on a lateral from its northern lines and it was still uncertain when it could bring additional capacity in service. Late word from the company was that it might not replace the line that exploded.

The result of the blast-aside from 11 fatalities-was severe disruption of delivery schedules. Prices at the Southern California Border moved to $5.80/MMBtu midweek. Although the price appeared to be easing, it jumped up again Friday morning to as much as $7/MMBtu, according to power generators in Southern California. Oddly, Permian Basin and San Juan Basin prices did react quite as strongly. San Juan capacity was unaffected, although deliveries were reallocated as end-users faced pro-rated curtailments, and the basin price hung between $3.30 and 3.35/MMBtu. Permian dropped from $4.70/MMBtu at the start of the week to about $4.30/MMBtu on Thursday.

The Alberta price was high but moderated as the week progressed, rising to a midweek high of $(C)4.86/Gigajoule but trailing off to $4.37/Gj on Friday [A. O'D.].

Western Electricity Prices
Week of August 21-25, 2000
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 67-994 57-210
California PX (WAC) 192-234 83-133.5
Mid-Columbia 160-260 90-130
COB 185-250 90-135
Palo Verde 200-230 85

Archives of the Western Price Survey for the past year are also available online.


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