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Western Price Survey / Archives

August 27, 1999
Power Buyers Play 'Name Your Price' During Market Emergency

Any power trader or end-user unlucky enough to get caught in this week's constrained marketplace had to wince at the price tag for spot energy. Prescheduled prices on the California Power Exchange crossed the century mark to 106 mills/KWh for Friday daytime deliveries, but bids for individual peak hours reached as high as 225 mills/KWh.

Real-time prices followed suit to as much as 200 mills/KWh at times. When asked what the current price of power was late in the week, one trader responded: "Name your price." He was not talking about low-ball bidding but about the vast range of prices being bid to secure supplies.

Throughout the region power prices showed a very wide spread, starting off the week relatively high in the 40 mills vicinity at most hubs but then climbing with no end in sight. At the top of the market, 16-hour blocks at Palo Verde reached between 80 mills and 90 mills/KWh, traders said. Even Mid-Columbia, which has been somewhat insulated from volatile market prices so far this summer, watched prices climb above 70 mills/KWh midweek. Bonneville Power Administration appeared to be expecting the situation to last into the weekend. BPA set its surplus power offerings at 67 mills for Northwest deliveries and 68 mills/KWh for COB/NOB deliveries Friday and Saturday-or the Power Exchange price if higher.

The California/Oregon Border hit 75 mills/KWh midweek, but that only told part of the story. As transmission maintenance constraints on the AC Intertie gave way to serious curtailments because of fires near tielines, Northern California schedulers scrambled for alternate supplies and delivery routes. The NP 15 price on bilateral trades shot to 125 mills/KWh, one marketer reported. As the PX off-peak price rose to 33 mills/KWh for Friday, it pulled other hubs up to near 30 mills/KWh.

Utility loads were at the high end of the scale, but not quite in record-breaking territory mainly because afternoon cloud cover clipped air-conditioning demand in California and the Southwest. The California Independent System Operator was expecting as much as 44,000 MW of transmission load statewide Thursday, while the California PX saw loads approach 35,000 MW for its customers. Added capacity, plus some decremental demand, borught premium prices on the PX hour-ahead and in Cal-ISO's reliability markets. The $250/MW ceiling price for ancillary services became a routine price tag this week.

Among other notable resource events was a lingering outage at the Intermountain Power Plant in Utah which cut into Southern California municipal utilities' available capacity and a partial deration of the San Juan No. 1 plant for tube leak repairs.

Grand Coulee Dam continued to have unit problems this week. GC Unit No. 23 was up and down most of the week while Unit No. 20 also tripped off-line late on Wednesday. Between the two, BPA found itself shy of about 1000 MW of hydro capacity.

The Alberta Power Pool had volatility problems of its own, with prices hitting the 495 mills/KWh mark each afternoon, though loads were not much above average [Arthur O'Donnell].

Gas Prices Retreat from Peak, but Bull Run is Not Over, Traders Say

Natural gas markets finally took a backseat to electricity markets this week, but not before fuel prices hit significant milestones at Western trading hubs. On Wednesday, before the NYMEX national benchmark reversed course and took other hubs along for the ride, delivery prices to the Southern California Border crossed the $3.02/MMcfd mark and the Alberta gas index peaked at $(c) 3.55/Gigajoule. "It's coming down a bit," one trader said, pointing to the fact that Thursday trades softened just a bit. But traders braced themselves for a possible restart next week, depending on weather patterns.

With temperatures in Texas cooling down, the pressure came off Permian Basin prices, which peaked at $2.95/MMBtu on Wednesday, then slid to $2.88/MMBtu. San Juan neared $2.75 then dropped to $2.69/MMBtu. After hitting its peak, the SoCal Border price followed NYMEX down a few notches to $2.95/MMBtu.

Malin prices were all over the map from a low of $2.50 to a high of $2.90 before centering at $2.71/MMBtu late in the week.

The Intra-Alberta Hub price ended the week at $3.48/Gj [A O'D.].

Cal-ISO Declares Emergency as Fire Limits Intertie; Yosemite Blaze Shuts Transmission from Hetch Hetchy

Power prices were already on their way to seasonal highs due to an extended high-pressure system blanketing the Western region, but a series of lightning induced fires turned up the heat on California power schedulers this week. At the peak of activity on Thursday, fire fighters reported more than 300 wildfires in California, Oregon, Nevada, Utah and Idaho. The worst, from a power market perspective, occurred in Northern California.

Scores of ground fires north of Chico in Butte County forced transmission operators to curtail capacity on the Pacific AC Intertie to 2200 MW, seriously limiting imported energy flows from the Pacific Northwest and wrecking havoc with utility transactions. The major transmission link between California and Oregon was already cut to 4200 MW of its rated 4600 MW worth of north to south capacity because of scheduled maintenance and to allow room on the grid for Northern California hydroelectricity.

The added constraint coincided with a surge in utility demand because of high temperatures and pushed energy prices to new highs for the year. It also brought further pressure on bottleneck transmission lines into Humboldt County, the San Francisco Peninsula and along Path 15, all of which experienced serious congestion this week.

As the California Independent System Operator reviewed its statewide load forecasts, schedulers foresaw as much as 44,000 MW of flow for Thursday afternoon and declared a Stage One Alert beginning 11 am through 8 pm. According to ISO communications director Pat Dorinson, operators worried that available imports from the Southwest would also be limited by heavy demand from desert utilities and a continuing outage at the Intermountain Power Plant in Utah.

A Stage One Alert is issued when reliability margins fall to 7 percent of forecast load and operators call for voluntary energy conservation by utility customers. Advancing the emergency to Stage Two would impose curtailments on interruptible power customers. This is the second emergency declaration put out by the ISO this summer. The ISO's record load of 45,880 MW was recorded on July 12.

While that prior emergency situation occurred as several Northern California set new system peaks, no utilities reported new record levels this week, in part because late afternoon clouds rolling over the state appeared to clip demand on Thursday.

Uncertainty over when the Intertie will return to normal capacity caused some frustrations for utility schedulers contacted by CALIFORNIA ENERGY MARKETS. Staff at the Northern California Power Agency's power pool dispatch center said that they had to reroute deliveries and found it difficult to finalize schedules for Saturday. "I wish the ISO would decide whether it will be 2200 or 4200 MW," a frustrated scheduler said. "We depend heavily on Northwest imports."

Meanwhile, another blaze effectively cut San Francisco's ability to import power from its Hetch Hetchy system at Yosemite National Park. A 3,300 acre brush and forest fire in the Stanislaus National Forest just west of the main entry to Yosemite forced operators to de- energize the 220 KV lines that feed power from Hetch Hetchy dams plants to the city's municipal power system. According to Laurie Park of the Hetch Hetchy Water & Power Department, the city was unable to access about 280 MW from its Holm and Kirkwood generation facilities beginning Monday afternoon.

"This unfortunately happened at the worst time," Park said, noting the high cost of replacement power this week.

While the Modesto Irrigation District usually buys some power from Hetch Hetchy, a district spokesperson said it was able to find alternate supplies as well as rely on its own hydro generation from nearby Don Pedro Reservoir, which was not directly affected by the blaze [A. O'D.].

Western Electricity Prices
Week of August 23-27, 1999
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 25-495 mills/KWh 5.8-39 mills/KWh
California PX (WAC) 41-106 26-33
Mid-Columbia 35-70 23-27
COB 35-75 27-30
Palo Verde 48-90 26-28

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


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