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Western Price Survey / Archives

September 3, 2004
Prices Labor to Stay Strong in Pre-Holiday Trading

Trading for power to be delivered this week was nearly complete by the middle of the week. The upcoming Labor Day holiday compressed the schedule of transactions, with weekend packages changing hands on Wednesday and power for next Sunday and Monday delivery moving on Thursday.

Temperatures and the demand for power rose steadily during the early part of the week. Load peaked at 42,920 MW in the California Independent System Operator control area on Wednesday afternoon as clear skies prevailed over much of the state. The price for power moved in concert with the weather and demand, but never exhibited a great deal of volatility.

The combination of ample power supply, continued decline in the cost of natural gas on the spot market and pre-holiday doldrums kept the price for power from rising precipitously.

North of Path 15, peak power prices opening the week at a spread of 48 mills to 55.50 mills/KWh, tacked another mill onto the high end on Tuesday, before dropping to between 48.50 mills and 52 mills/KWh in mid-week deals. The slippage was primarily due to the delivery timeframe--Wednesday transactions this week were for power to be delivered over the long weekend.

Nighttime power at NP15 moved little during the first part of this week, sticking to a range of 36.25 mills to 38.25 mills/KWh. The price for low-demand power scheduled for delivery this coming Sunday and Monday skipped up to between 41 mills and 42.50 mills/KWh in Thursday trading.

High-demand power costs in the southern half of the state pretty much matched the NP15 prices this week. SP15 power drew a high of 56.25 mills/KWh on Tuesday then slipped to between 47.25 mills and 52 mills/KWh the following day. Off-peak power at SP15 ran a bit lower than the Northern California price, sinking 28.50 mills/KWh for weekend packages during Wednesday trading. Power prices for delivery next week rallied on Thursday, reaching a high of 37.50 mills/KWh.

Congestion on transmission lines and the need to achieve equilibrium pushed the ex-post price for both incremental and decremental power at SP15 up to $96/MWh in Cal-ISO's ancillary-services markets briefly late Thursday afternoon. In comparison, the NP15 ex-post price ran at $31.25/MWh for the same time period

Power prices in the Northwest lagged behind California prices, with peak power at Mid-Columbia trading as low as 34.25 mills/KW on Monday. Warm weather gave power costs a jolt the following day, with Mid-C trades recorded at a high of 45 mills/KWh. Prices for off-peak power at the hub drew a low of 24.50 mills/KWh at the start of the week, but by Thursday the price had swelled to 38 mills/KWh.

At the California-Oregon border, the price for peak power reached a high of 48.25 mills/KWh for Wednesday and Thursday deliveries. Prices hovered near that level for weekend packages before shedding a mill or two for next-week deliveries. Low-demand power at COB changed hands for 30.50 mills to 31.75 mills/KWh on Monday before gaining ground during the next few days of trading. Off-peak packages traded for as much as 40 mills/KWh in Thursday trading.

In the California Independent System Operator control area, less than 3,000 MW of power was unavailable during most hours of the week, leaving plenty of power on the grid in order to meet demand. The largest single unit listed by Cal-ISO as being on a forced outage was the 600 MW TermoElectrica unit in Mexico. The unit went off line on Thursday morning but was curtailed by just 85 MW by that evening. Prior to that time, AES' 178 MW Redondo Unit No. 5 was one of the larger units on an unplanned outage. Pacific Gas & Electric's 404 MW Helms Unit No. 3, a pumped-storage facility, began a scheduled outage on Thursday [Shauna O'Donnell].

Squirreling Stunts Gas Prices

The amount of natural gas being injected into underground storage currently does not bode well for any hoped-for price rally anytime soon. This week, the Energy Information Administration announced that last week, storage caverns received a hefty 81 Bcf, bringing the total amount of gas in storage to 2,695 Bcf, more than 7 percent above the five-year average. According to some market watchers, the Lower 48 is well on its way to having 3,232 Bcf in storage by the end of the injection season.

Increasing stored quantities of gas, the slip in oil prices and the absence of any spike in demand has pulled the price of natural gas on the spot market down. At both Western producing basins and receipt points, the price of gas this week stayed below $5.00/MMBtu. For example, last week's high price of $5.20/MMBtu was replaced with a high for this week of $4.90/MMBtu at the Topock delivery point. On average, prices dropped throughout the West by about 30 cents or more. Alberta gas went from a high of $4.92/MMBtu last week to just $4.37/MMBtu this week [S. O'D.].

Western Electricity Prices
Aug. 30 - Sept. 3, 2004
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 10.99-264.49 10.99-172.93
Mid-Columbia 34.25-45 24.50-38
COB 38.50-48.25 30.50-40
NP 15 48-56 34.25-42.50
SP 15 47.25-56.25 31-37.50
Palo Verde 40-50.25 24.25-35

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


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