Western Price Survey / Archives
September 3, 1999
The upcoming Labor Day weekend pushed power trading into holiday patterns, with most transactions for the week completed by Wednesday afternoon so traders could arrange for their weekend schedules on Thursday. In contrast to last week's turbulent market, in which prices reached 1999 highs because of transmission constraints and hot weather, things were calmer and quieter at Western trading hubs.
The trend for the week was almost entirely downward, as prices and utility demand sank steadily in the face of cooler weather. The California Power Exchange's market clearing price for daytime deliveries dropped from a Monday high of 54.3 mills to roughly half that figure for Friday at 27.8 mills/KWh. The off-peak slide was not so severe, from 25.8 mills to 18.7 mills/KWh in late-week bidding. The price decline was dictated by diminishing loads, as the daily prescheduled demand figure fell from 642 GWh on Monday to just 561 GWh for Friday.
Other hubs followed the leader and by late in the week, 16-hour blocks for all Western markets fell into the 24.75 mills to 28.5 mills/KWh range. In comparison, off-peak power prices slipped a bit but remained strong from 19 mills in the Pacific Northwest to 24 mills/KWh heading into Southern California.
By the close of prescheduled business, Mid-Columbia transactions were reported at 24.75 mills, California/Oregon Border prices averaged 26.5 mills and Palo Verde fell to 28.25 mills/KWh. Prices are expected to fall further for what is usually a very light-load holiday weekend.
Weather forecasts into next week project below-average temperatures and a bout of rain showers for the Northwest but a possible burst of late-summer sun for the Southwest.
With most September futures contracts having closed at about 40 mills/KWh last month, any hint of hot weather could quickly boost bilateral prices by next Tuesday.
Transmission systems returned to scheduled capacity after firefighters finally brought Northern California wildfires under control. For the California/Oregon Intertie, that meant north-to-south transfer capacity of about 3,800 MW (out of the total 4,600 MW rated capacity) as Bonneville Power Administration conducted maintenance on some Oregon legs of the line.
Barring unforeseen curtailments, the AC Intertie should be back to at least 4,300 MW next week.
The Alberta Power Pool saw peak prices hit the ceiling of 998 mills/KWh on Monday with an aftershock of 125 mills/KWh on Tuesday. After a more normal day on Wednesday, pool operators were bracing for an anticipated firm load alert on Thursday and prices again popped up to 998 mills/KWh for the afternoon peak period. An interruptible load alert last from 11 am to 4 pm on Thursday.
In resource news, rotating outages at the San Juan coal plant in New Mexico kept schedulers busy. Units 1 & 3 were off-line last weekend but both returned to service just as Unit No. 4 tripped. The plant was back on-line Thursday but by then, Unit 3 had fallen off-line again. That unit was expected back in service by Sunday.
The WNP-2 nuclear facility drifted to 78 percent of capacity on its way to a mid-month refueling. Later this month, the Diablo Canyon No. 1 unit will take a maintenance vacation starting September 25, while the Palo Verde No. 1 will go off-line October 2 for an estimated 45 day refueling [Arthur O'Donnell].
Gas Markets Reverse Course
After several weeks of upward mobility, natural gas prices took an abrupt about face this week and sank to what many would consider normal seasonal levels. The precipitating event was a big drop in NYMEX benchmark prices on Thursday. The big screen plummeted $0.26/MMBtu to rest at $2.47/MMBtu, pulling hub prices around the nation along with it.
The Southern California Border price fell to about $2.70/MMBtu and some traders were projecting it to go down as low as $2.50/MMBtu because of slack generation fuel demand and the extended Labor Day weekend. Others were not convinced, citing projections of hotter temperatures in the Southwest next week. "It's just a downward correction," said one marketer who likened the commodities market to stock trading.
"We love this market," countered a gas buyer for a large utility.
The severe drop of market prices this week combined with very moderate temperatures in Northern California and the Pacific Northwest to portend possible high-inventory conditions on the PG&E Gas Transmission pipelines from Canada. "OFO's will be on everyone's mind" as they wrap up trades for the holiday weekend, one trader said.
Regional prices crested on Monday and Tuesday, then followed a steep decline. The Permian Basin price fell from a high of $2.80 to $2.60/MMBtu. San Juan prices fell to about $2.40 and the SoCal Border price dropped to $2.70/MMBtu from the $2.93 peak.
The San Francisco CityGate price dropped by about $0.05/MMBtu each day to hit $2.80. The Alberta index price similarly slipped from a high of $(c)3.40/Gigajoule earlier in the week to close at $3.00/Gj on Friday [A. O'D.].
Archives of the Western Price Survey for the past year are also available online.
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