Western Price Survey
August 26, 2005
A sudden outage of the Pacific DC Intertie caused widespread power cuts to Southern California businesses and residences late Thursday afternoon. The 500 KV line, which transfers about 2,800 MW of electricity between Oregon and Southern California, tripped just before 4 pm. According to a Western Electricity Coordinating Council daily system status report issued Friday, the outage stemmed from a problem at the Los Angeles Department of Water & Power's Sylmar Substation.
The California Independent System Operator was forced to call upon utilities in the region to shed nearly 2,000 MW of load--900 MW of firm load and 800 MW from customers enrolled in voluntary interruptible-load programs. Approximately 500,000 customers were affected by the rotating outages, most of them in Southern California Edison territory.
Exacerbating the situation was an unanticipated spike in demand on Thursday, brought on by higher-than-forecast temperatures in the state. The Cal-ISO's day-ahead peak-demand estimate predicted usage in its territory would be a shade under 40,000 MW. However, warm temperatures increased cooling demand in the southlands and drove peak load in ISO territory up to 44,650 MW for the day.
Though the exact reason for the sudden outage remained a mystery late Thursday, some transfer capability was restored to the line and Cal-ISO authorized utilities to restore power to firm customers 30 minutes after the line tripped. The transmission emergency was declared over at 6 pm, and during the early hours on Friday full power was restored to the PDCI.
Loss of generating capacity plagued the massive Palo Verde Nuclear Generating Station early this week, as a second unit at the facility was forced off line, bringing the total amount of power unavailable from the facility to 2,578 MW.
The 1,243 MW Unit No. 1 was shut down a couple of weeks ago to repair a valve leak, and the 1,335 MW Unit No. 2 followed suit late this past Monday. The apparent cause of that unit's shutdown was a software glitch. Both units are slated to be ramping back up to full power by this coming weekend. The 1,247 MW Palo Verde Unit No. 3 remains operational.
The loss of the second unit at Palo Verde was represented in the spot electricity markets by a bump up in the price of next-day power delivered to the Palo Verde hub. For instance, after opening on Monday between 80 mills and 84 mills/KWh, the price of peak power skipped up to a range of 93.75 mills to 100.50 mills/KWh. Off-peak power prices at the hub reacted similarly to the loss of generation. Low-demand power cost between 51 mills and 54.50 mills/KWh on Monday before jumping up to a high of 69.25 mills/KWh on Tuesday. Both the peak and off-peak electricity price at PV shed as much as 10 mills in Wednesday dealings. Peak-power prices slid another 5 to 10 mills in late-week trading as both units emerged from the sick bay and began the slow climb back up to full output.
California power costs also moved up on the loss of the two Palo Verde units. The price increase was further driven by a weather-related uptick in demand in the state.
Peak-time power north of Path 15 hit a high of 94 mills/KWh on Tuesday, anywhere from 10 to 12 mills more than the going price the previous day. Off-peak power attracted between 53.75 mills and 57 mills/KWh on Monday, moved up to a high of 64 mills/KWh on Tuesday and shed a couple mills from that price at midweek. By Friday the cost of nighttime power at NP15 ran up to 72.25 mills/KWh.
Southern California spot prices matched the movement in NP15 territory. Peak-time power changed hands for between 80 mills and 82.25 mills/KWh at the beginning of the week. The cost of daytime power topped out at 95.50 mills/KWh in Tuesday trading before weakening on Wednesday, closing that day in a range of 82.75 mills and 92.25 mills/KWh. Off-peak power costs ranged from 53.50 mills to 73.25 mills/KWh this week.
In the Northwest, Mid-Columbia power drew a high of 80 mills/KWh on Wednesday, but generally spent most of the week in the mid-seventies. Off-peak power traded for next-week delivery attracted a high of 67.75 mills/KWh, nearly 20 mills more than the start-of-the-week price.
California-Oregon border power generally split the difference between the Columbia and California prices. Daytime power cost between 73.25 mills and 75.25 mills/KWh on Monday and rose steadily throughout the week, closing on Friday at a high of 85.50 mills/KWh. Off-peak power at COB topped out at 69 mills/KWh, also on Friday [Shauna O'Donnell].
Katrina Pressures Gas Costs
With the cost of crude oil increasing to a new record high of $68 per barrel Wednesday, any hopes of a drop in the price of natural gas were blown away with the upgrading of Tropical Storm Katrina to hurricane status. The hurricane hit the coast of Florida on Thursday, reportedly causing the deaths of at least four Floridians. On Friday the good news buried in the devastation left in Katrina's wake was that it looked like the hurricane would pass by offshore drilling rigs, leaving them unscathed.
The price of natural gas on the spot market settled into the mid-$8 range for deliveries into California. At Malin the price reached $8.51/MMBtu on Tuesday, while gas taken away at the Southern California border receipt point at Topock cost as much as $8.69/MMBtu that day [S. O'D.].
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