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Western Price Survey

August 25, 2017
Heat Wave Sends Western Prices Above $100/MWh

Late on Aug. 25, as traders were readying for the weekend, the California Independent System Operator’s real-time power price map displayed a price of $987.17/MWh in the 3 p.m. to 4 p.m. trading interval, with the majority of Western U.S. nodes showing in bright red, indicating prices above $200/MWh. At the same time, the localized prices on the CAISO site were in the $50 range. CAISO attributed this to a system error, which was quickly fixed.

Separate from the system error, Western power prices soared above the $100/MWh mark by Aug. 25, on triple-digit weather in Southern California and heavy demand.

“Mead and Palo Verde came out of the gates swinging this morning as the Desert Southwest loads were slightly higher than expected,” said Jeff Richter, principal/owner of Portland-based EnergyGPS. “This triggered the other key trading hubs to move up,” Richter said in response to emailed questions.

The hottest weather is forecast Aug. 29; CAISO expects demand to reach 46,315 MW that day, and possibly to rise to 47,317 MW Aug. 30.

“This is going to trigger more ancillary service scarcity pricing as well as gas withdraws from Aliso Canyon,” said Richter. “If that happens the evening ramp hours will see extreme price volatility that many of the surrounding balancing authorities wanted to be well equipped for.”

Western average power prices added between roughly $64 and as much as $100 compared with the previous week. Palo Verde peak power was up $100.20/MWh to $131.25/MWh in Friday-to-Friday trading.

Off-peak average values also increased, up between $11.30 and $21.10 in the trading period.

Working natural gas in storage was 3,125 Bcf as of Aug. 18, according to U.S. Energy Information Administration estimates. This is a net increase of 43 Bcf versus the previous week.

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Total national natural gas consumption increased 4 percent week over week, according to the EIA. Natural gas use for power generation grew 6 percent.

Henry Hub gas spot values rose 9 cents to $2.97/MMBtu between Aug. 17 and 25.

Western gas prices added between 2 and 16 cents in Thursday-to-Thursday trading. Malin and Opal natural gas values each gained 16 cents, ending at $2.79/MMBtu and $2.74/MMBtu, respectively.

CAISO demand peaked at 38,675 MW Aug. 22; however, the week’s high demand was expected Aug. 25, when grid demand was forecast to reach 39,075 MW.

Columbia Generating Station in Washington remains off line following an Aug. 20 emergency shutdown, prompted by the failure of a valve. –Linda Dailey Paulson.

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

The Western Price Survey is excerpted from Energy NewsData's comprehensive regional news services. See for yourself how NewsData reporters put events in an accurate and meaningful context -- request a sample of either or both California Energy Markets and Clearing Up.

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Contact Mavis Scanlon, editor with questions regarding Price Survey content.

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