Western Price Survey / Archives
September 1, 2000
While weather forecasters see possible overcast skies and cooler temperatures for the upcoming Labor Day weekend, you will not hear many power schedulers complaining. Even those on the selling end of the market seemed to welcome this week's trend-reduced trading activity on significantly lower loads and substantially lower prices throughout the West.
Actually, that was the trend for the latter part of the week, which began on a note of anxiety after last Saturday's crash of Palo Verde Unit No. 2 that sent the California Independent System Operator into an unusual weekend Stage One Alert. Gas prices into Southern California, already at historic peaks, zoomed again on Tuesday. Energy prices at all markets started in the 200 mills to 230 mills/KWh range for daytime deliveries and were generally above 100 mills/KWh for off- peak.
The market broke on Wednesday morning, however, with the California Power Exchange price plummeting by a third, then again by half. By the end of the week, CalPX prices were just about flat across the entire 24 hour period at 65 mills/KWh for peak and 62.7 mills/KWh for off- peak-a far cry from the 217 mills/KWh peak price set as the week began.
The major cause of price deflation was reduced energy consumption. Hourly loads on CalPX barely rose above 25,500 MW and the Cal-ISO peaked in the 32,000 MW to 33,000 MW range from Tuesday onward-about 10,000 MW lower than its afternoon peak in recent weeks.
The Palo Verde outage proved brief, mainly due to excess pressure rather than anything more serious, and the unit was back to full power by Thursday morning. Also, the advance trading schedules for end-of- month and three-day-holiday bookings took the edge off the market.
"We're just trying to keep up with the downslide," one marketer said.
Even though various reports put energy prices at 90 mills to 105 mills/KWh at all major bilateral hubs, traders said activity was so slight on Thursday they could not even quote an offering price. With real-time markets in the 75 mills to 90 mills range, that served as a decent proxy for the markets at Mid-Columbia, California/Oregon Border and Palo Verde.
Taking advantage of the breather offered by the extended holiday are operators of the Columbia Generating Station, which was set to go off- line Friday at noon for long-awaited replacement of a broken pump seal. The 1,150 MW unit has been operating at 59 percent of capacity for several weeks to prevent blowout of a backup seal. The plant is expected to be back to full capacity midweek.
San Onofre management also seized the opportunity to make minor repairs this week, taking SONGS Unit No. 2 down to about 98 percent on Thursday. No other major generation or transmission problems were reported this week-something of a miracle considering the heavy use assets have taken during the crunch [Arthur O'Donnell].
Gas Marketers Still on Edge of Seats
Even though the great reduction in electric generation demand halted a spectacular peaking trend in natural gas prices midweek, it did not completely reverse the tide. Though some hubs gave back the dollar or so in price hikes seen on Tuesday following the return to service of one El Paso pipeline into California, prices at key hubs remain at very high levels.
The return of El Paso's Line 1100 helped restore deliveries from Permian Basin to the Southern California Border to between 600 MMcfd and 800 Mcfd, the company said Thursday. That, plus diminished electric loads, eased prices at Topock from above $7.20/MMBtu to about $5.50/MMBtu Wednesday. There was a slight rise at the end of the week to $6.09/MMBtu, largely because of end of month balancing, traders said. Permian Basin prices varied considerably between $4.42 and $4.72 this week, ending somewhere around $4.55/MMBtu Thursday on residual heat in Texas rather than California draws driving the price.
The big spread between those points and San Juan Blanco inflated and deflated during the week, with the basin price ending up in the $3.55 to $3.65/MMBtu range. At one point, there was as much as a $2.65/MMBtu difference in the prices between SoCal Border and San Juan Basin.
Northern California gas prices were also quite varied and remained high even after the pressure was relieved. Not only were gas traders buckling their seat belts for this week's ride, one buyer joked, they were wearing asbestos underwear.
Malin prices shot up to about $6/MMBtu before settling to the $5.11 to $5.14/MMBtu range. PG&E CityGate prices also spiked, fell and bounced again to about $5.40/MMBtu.
The Alberta index trend appeared all upward, from a starting point of $(C)4.60/Gigajoule to $5.70/Gj in late trading Thursday, settling at $5.64/Gj. Tight supplies and hot weather forecast in the US Midwest were considered the reason for the premium [A. O'D.].
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