Western Price Survey / Archives
September 8, 2000
The California Independent System Operator avoided any alerts or emergencies this week, but that did not stop power prices from rising in unusual patterns. Loads edged up as the week progressed, but energy prices raced ahead, with the unusual result that off-peak power costs far outpaced peak prices at the California Power Exchange on Thursday. The daytime CalPX clearing price had more than doubled from the low- load Labor Day holiday level of 73 mills to 155 mills/KWh for Thursday's deliveries.
Even as the daily index dropped to 124 mills for Friday, the off-peak price zoomed to 153 mills/KWh, leaving traders scratching their heads in wonder.
"Bizarre," was the response of one veteran trader. If there was a good reason, it probably had more to do with perception of a supply constraint rather than any actual shortages. After Pacific Gas & Electric's Diablo Canyon No. 2 went offline Tuesday for steam system repairs, traders have been pointing to a dearth of baseload generation. Other sporadic outages at Colstrip, Cholla and Jim Bridger stations spread the squeeze throughout the region. The Columbia Generating Station will make up for some of the losses by returning to full service Friday.
Big jumps in natural gas prices also triggered a run-up on real-time markets through the week. Gas-fired generation (and alleged market opportunism) has been setting the price pretty much all summer. This week, there was a small indication that hydroelectricity has not completely disappeared, though, as Bonneville Power Administration made tentative steps back into the market. Beginning Thursday, BPA had 200 MW of daytime peak surplus power to sell at CalPX-based prices, and it slightly widened the hours of availability into the weekend.
Still, system loads at Cal-ISO only reached above 36,500 MW late in the week, giving operators a welcome rest from the frantic search for power they have been undergoing all summer.
Bilateral hub prices moved up to 150 mills/KWh at Mid-Columbia and California/Oregon Border at peak-but sank to 120 mills/KWh for Friday/Saturday blocks. Palo Verde prescheduled rose to 150 mills/KWh and "anxiety about prices" was apparent in a real-time sale at 200 mills/KWh after Idaho's Bridger Station dropped 500 MW in the early morning hours Thursday. By Friday, Palo Verde deals were reported at 105 mills to 155 mills/KWh for the weekend.
A host of transmission maintenance orders were listed beginning this week, but none appeared to cut into intertie transfer capability greatly. Some work along Nevada corridors appeared to affect deliveries into Southern California but bids from Southwestern sellers into the CalPX market were largely responsible for driving zonal prices down to about half of the unconstrained price as some utilities put everything they had into the CalPX auction.
Much more transmission maintenance is scheduled for mid-month, as the Northwest prepares for its peaking season. However, should another round of heat threaten California, repairs could be deferred to keep the lines open for hydroelectricity [Arthur O'Donnell].
Storage Woes Pump Daily Gas Prices
An exceptionally low national storage injection report of just 42 Bcf sent natural gas prices rocketing higher midweek. Although there was some softening afterward, continued concerns about future supply availability and cutbacks in Canadian deliveries because of plant maintenance put a rather high floor under prices throughout the West.
After lagging behind recent price spurts at Permian and Southern California Border, prices at San Juan Basin and Malin both hiked upward by more than $1/MMBtu compared to last week. Traders said higher Alberta prices had a ripple effect throughout the marketplace.
Although El Paso pipeline has restored flows to about 750 MMcfd between Permian and the SoCal Border, Topock prices remained in premium territory. The heavily watched index price rose from a holiday lull of $5.92/MMBtu to about $6.35/MMBtu midweek, before softening ever so slightly. Permian moved up from $4.65 to $4.87/MMBtu on warmer California temperatures and continued Texas heat.
The San Juan Basin climbed to the $4.45 to $4.50/MMBtu range Thursday- a far cry higher than it has been.
Similarly, Malin prices were pulled by the Canada/Rocky Mountain uplift. Prices reached $5.90/MMBtu but then eased to $5.68/MMBtu, traders said. The PG&E CityGate price mimicked the Topock price at about $6.27/MMBtu.
In Alberta, plant turnaround, or seasonal maintenance was responsible for cutting about 500 MMcfd from delivery schedules this week. An explosion on a small gathering line in Northwest Alberta cut another 50 MMcfd from the Nova system. All this resulted in pushing the Alberta index from $(C)5.55/Gigajoule to $6.34/Gj midweek. The index price ended out at $6.03/Gj Thursday [A. O'D.].
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