Western Price Survey / Archives
September 10, 2004
For the second straight day this week and the seventh time this year, electricity demand in the California Independent System Operator control area reached a new peak on Wednesday. The peak demand hit 45,597 MW just past 4 pm, exceeding Tuesday's record peak by more than 400 MW.
Hot weather has persisted throughout California this week and over the just-past holiday weekend, driving the use of air conditioners and other cooling devices that draw electricity. Perhaps the only thing keeping electricity demand from skyrocketing beyond manageable levels was the weather in Southern California--where temperatures ran a bit lower than in Northern California and the Central Valley.
Despite the record demand and wide-ranging heat wave, prices for power in the West remained fairly static. Trading for the week began on Tuesday following the Labor Day holiday on Monday and both California hubs attracted power prices at least 10 mills above those recorded in the Southwest and Northwest. The high this week was reached at NP15 on Tuesday, when peak-time power hit 58.50 mills/KWh. On-peak power costs reached 58 mills/KWh at SP15 that day.
Oddly, prices dipped as demand increased. Peak power for Thursday delivery moved for between 53.50 mills and 55.25 mills/KWh at NP15 while the cost at SP15 ranged from 53 mills to 55 mills/KWh. A cooling trend in the state's weather could account for the drop.
Off-peak power in the northern half of the state opened the week at a high of 38.75 mills/KWh, while Southern California power ranged from 33 mills to 35.50 mills/KWh on Tuesday. The following day, the price for nighttime power on the spot market shed as much as 5 mills/KWh at SP15. The price at NP15 lost 1 to 2 mills. By the end of the week, in trading conducted for next-week deliveries, off-peak power at NP15 cost as much as 40.50 mills/KWh, while SP15 power drew as much as 38 mills/KWh.
There was a sufficient amount of power available to Cal-ISO this week and the system operator did not have to call any alerts or emergencies. Rather, the system was kept at the ready by a "restricted-maintenance" call by Cal-ISO on both Tuesday and Wednesday and this provided enough power to the grid to keep the juice flowing uninterrupted. In addition, regional weather cooperated. The heat wave in California was not simultaneous with any such event in the Northwest or Southwest, allowing Cal-ISO to rely significantly on imports to meet demand.
"We were bringing in about as much as we could from the north, and about as much as we could from the south," observed Mary Jo Thomas, operations en-gineer with Cal-ISO on Wednesday. "The point is, just because we made it through yesterday and today, don't think we're doing great, because we kind of got lucky."
One thing complicating the supply-demand balance in Pacific Gas & Electric territory early this week was a raging wild fire that swept through the Santa Rosa region on Monday. Five units totaling about 500 MW were off line at the Geysers geothermal facility near Healdsburg that day, and a number of high-voltage transmission lines were deenergized as fire fighters battled the blaze. The fire was contained by late Tuesday and the units and lines returned to service. Despite the major constraints on the local-area electricity system, rolling outages were not needed.
In the Northwest, power prices stayed in the low forties early this week. Opening on Tuesday between 43.25 mills and 45.50 mills/KWh, Mid-Columbia high-demand power dropped down to between 37.75 mills and 40 mills/KWh in late-week trading. The price for off-peak power hit the 34.50 mills/KWh mark on Friday for next week deliveries.
California-Oregon Border supplies changed hands for as much as 50 mills/KWh on Tuesday before shedding as much as 9 mills later in the week [Shauna O'Donnell].
Gas Prices Continue to Slide
The price for natural gas hovered close to the $4.00 mark for the first time in quite a while at the producing basins in the Southwest. At the AECO hub the price even slipped down to $3.87/MMBtu early in the week. Meanwhile, at the California receipt point at Topock, the price of natural gas ranged between $4.30 and $4.78/MMBtu this week before settling on Friday at between $4.40 and $4.52/MMBtu.
Burgeoning storage quantities continued to put downward pressure on the cost of the fuel on the spot market. Consistent with the past few weeks, the most recent injection figures reported by the Energy Information Administration showed another healthy input into storage last week. The 80 Bcf injection brought the total amount of gas in underground storage at 2,775 Bcf [S. O'D.].
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