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Western Price Survey / Archives

September 20, 2002
Transmission Blips Do Not Push Prices

A heavy load of central California generation was off- line Thursday so that operators could work on key transmission lines along Path 26 and Path 15. Nearly 2,000 MW of units at Diablo Canyon, Morro Bay and Sunrise Station were curtailed for the day, although it was all listed as planned outages by the California Independent System Operator. Diablo Canyon No. 2 was back to full output on Friday but the other ZP26 units remained off line.

Transmission repairs and testing affected 500 KV lines from Round Mountain on the California/Oregon Intertie down to Midway and beyond. COI was limited to 3,800 MW southbound, Path 15 was cut to 2,550 MW and Path 26 remained capped at 2,600 MW through Friday

Definitely not planned was a converter station relay at the Sylmar end of the DC Intertie on Wednesday evening that reverberated all the way up to the Pacific Northwest. As frequencies gyrated through the grid, Bonneville Power Administration dropped 2,000 MW of generation at Grand Coulee, Chief Joseph and The Dalles. The DC Intertie was already being held to 2,280 MW southbound on line outages at McNary and Malin substations.

Surprisingly, these system incidents had no discernible effect on prices, which slipped by about 2 mills to 3 mills/KWh across the board on trades made for Friday/Saturday. High pressure systems and onshore breezes kept skies clear and temperatures warm throughout the West, though there were few places of 100 degree plus readings. The relatively comfortable temperature band did away with the morning chill in the Northwest while holding down air-conditioning demand in the Southwest.

After undercutting its load forecasts most of the week, Cal-ISO found its peak rising above projections and 37,100 MW on Thursday, but no one expected any kind of system problems or extraordinary load.

Mostly the high prices set midweek were the result of booming natural gas costs, which were responding to national fears of a possible hurricane in the Texas Gulf. The boost in SoCal Border prices to above $3.60/MMBtu translated to electricity nearing 40 mills/KWh at SP15 and 38 mills/KWh at NP15 during Wednesday's trading.

Though the fuel prices stabilized, electricity edged downward.

In the Northwest, a high peak price of 25 mills at Mid-Columbia gave way to the 21 mills/KWh mark late in the week, while off-peak power slipped from 21 mills to 18 mills to 20 mills/KWh. BPA increased its daily offer slightly, such that 500 MW will be available for Sunday and Monday delivery in both peak and off-peak periods. Previously, BPA held off-peak to 200 MW to push sales into higher prices times.

The California/Oregon Border price was running somewhere in between the Mid-C peak and NP15, allowing for arbitrage by lucky transmission capacity holders. A typical deal for the weekend might be to buy COB at prices ranging from 28.5 mills to 32 mills/KWh, then turn around and sell at NP15 for 35 mills to 36 mills/KWh. Off-peak was relatively steady in the 20 mills to 23 mills/KWh range in Northern California.

Because of its coal and nuclear portfolio, the Southwest was not feeling the same gas pressure as California. Palo Verde reached 35 mills before falling back to 26 mills/KWh. Mead was a few mills pricier but neither hub approached the 39 mills peak seen at SP15 earlier. Off-peak prices eroded to 16 mills to 18 mills/KWh in the desert [Arthur O'Donnell].

Isidore Brings Fear into Gas Markets

Hurricane hype or not, national gas markets spun wildly higher this week as traders kept one eye on winter forecasts and the other on tropical storm Isidore. The storm was later upgraded to hurricane status and could hit land anywhere from Texas to Florida. It was the uncertainty factor that drove NYMEX Henry Hub prices toward the $4/MMBtu mark for the first time all year.

Western pricing did not come on so strong-not surprising given the less than direct connection to Gulf supplies-but it did move upward by $0.40/MMBtu or more from bottom to top of the market. The Permian Basin price was like an accordion that opened and closed between $3.201and $3.60/MMBtu.

Alberta gas was even more dynamic, skyrocketing to $(C)4.71/Gigajoule midweek.

The only market laggards were at San Juan Basin, which had trouble rousing from the $2.30 to $2.50/MMBtu range most of the week-although some transactions were logged at $2.59/MMBtu-and the continuing weak Wyoming markets, where reaching $1.20/MMBtu would seem like a huge achievement for sellers.

The SF CityGate boomed to $3.81 for the highest domestic price in the West, but then slipped to the $3.50/MMBtu range in late trading [A. O'D.].

Western Electricity Prices
Week of September 16-20, 2002
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 34-195 12.9-40
Mid-Columbia 20.5-27.5 19-21
COB 28-32.5 19-22.5
NP 15 34-38 20.5-23
SP 15 34.5-39 18-22.5
Palo Verde 26-36 16-19.5

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


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