Western Price Survey
September 9, 2005
In regulatory news this week, the California Public Utilities Commission vociferously opposed Proposition 80, a proposal that will appear on the November special election ballot courtesy of its sponsor The Utility Reform Network.
During the Commission's September 8 business meeting, Commissioner Dian Grueneich cited a litany of complaints against the measure--it would prevent the CPUC from requiring dynamic pricing for existing small commercial and residential customers and would require additional investment in costly and heavily polluting peaking power plants. The measure "freezes direct access permanently," she said, "eliminating customer choice."
Moreover, "most of what Proposition 80 will do is already underway at the Commission," she said, including regulating energy service providers to ensure resource adequacy, adopting the loading order and accelerating the renewable portfolio standard.
"The Commission does not need additional authority to continue these activities. Codify-ing them in statute is overly prescriptive and complicated," she said.
Grueneich also expressed dismay that Proposition 80 would hamstring Governor Scharwzenegger's greenhouse gas emissions goals, which assume achieving a renewable portfo-lio standard goal of 33 percent by 2020. The new RPS goal would require a majority vote in the Legislature, Grueneich said, but . Proposition 80 would require it to get a two-thirds vote. "On this basis alone, Proposition 80 should be opposed," she argued.
Commissioner John Bohn said that "if we learned anything during the electricity crisis, it's important for policy makers to have flexibility. Proposition 80 severely limits this flexibility.
"I can appreciate the interest in enshrining certain values, but this is a pernicious way to do it," he said, saying it ran counter to principles of democratic government.
Brown concurred, noting that markets and technology can change. "We'd be locking our-selves into one mode of energy market and delivery and that sort of handcuffing of flexibility is terribly imprudent."
Commission President Michael Peevey had the final CPUC word on the TURN measure: "It's a classic turkey that deserves the fate of a turkey on Thanksgiving Day" In California, peak-time electricity deliveries north of Path 15 attracted between 91.25 mills and 97 mills/KWh on Tuesday, dropping down to a low of 76.50 mills/KWh for weekend deliveries. Off-peak power costs followed a similar trajectory, opening the week at a high of 65.50 mills/KWh before shed-ding a few mills on Thursday to close between 58 mills and 60.25 mills/KWh that day. On Fri-day, trading for next-week deliveries boosted the price to 69.50 mills/KWh.
South of Path 15 power drew as much as 96.50 mills/KWh for peak-time deliveries on Tuesday. Power costs at the hub hit a low of 77 mills/KWh on Thursday. Off-peak power costs trailed daytime costs by about 20 mills this week, ranging between 59 mills and 64 mills/KWh for the Monday-through-Thursday period. On Friday the price hit 69.50 mills/KWh.
Palo Verde power costs were able to relax a bit this week, as all three units at the massive Palo Verde Nuclear Generating Station were up and running at full power. Peak power at PV traded for between 86.25 mills and 89 mills/KWh on Tuesday before slipping down to 73.50 mills/KWh two days later. Off-peak power at Palo Verde stuck to the mid- to high fifties much of the week. On Friday the price scooted up to a high of 66.25 mills/KWh.
Northwest peak power was dealt at Mid-Columbia for between 72.25 mills and 78.50 mills/KWh early this week. The price dropped as low as 64 mills/KWh on Thursday before re-gaining ground on Friday, when it reached 73 mills/KWh. Low-demand power at Mid-C re-corded a high of 66 mills/KWh on Tuesday, but faded to between 57 mills and 60 mills/KWh later in the week [Shauna O'Donnell and Chris Raphael].
Storage Numbers Slip for Producing Basins
The cost of natural gas on the Western spot markets continued its flirtation with the $10 mark this week, albeit with less ardor than prices in other parts of the country. For instance, at the Henry Hub, natural gas prices heated up to just above $11/MMBtu in Friday's trading ses-sion.
The price of the commodity at the Permian producing basin started the week between $9.56 and $9.86/MMBtu but slipped to a low for the week of $8.76/MMBtu on Thursday. San Juan Basin gas trailed, changing hands for between $8.30 and 8.59/MMBtu at the end of the week.
California gas deliveries attracted close to $10 at the start of the week, but as production in the Gulf Coast continued to increase and demand for gas from electric generators eased, the price faded. Topock gas drew as much as $9.75/MMBtu on Tuesday, but by Friday was moving for between $8.70 and $9/MMBtu.
PG&E CityGate gas also lost ground as the week wore on. Topping out at $9.82/MMBtu on Monday, the price of natural gas at the hub ranged between $9.18 and $9.38/MMBtu at the close of the week.
The Energy Information Administration reported injection of natural gas into underground storage totaled just 36 Bcf for the week ending September 2. An illustration of the effect of Hur-ricane Katrina on the producing basins was exhibited in the EIA's numbers, which showed a withdrawal of 6 Bcf from basin storage last week. This contrasted sharply with the 40 Bcf in-jected in the East and 2 Bcf put into storage in the West [S. O'D.].
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