Western Price Survey / Archives
September 21, 2001
With energy prices at their lowest levels in more than two years, traders this week suggested that coal power has displaced natural gas as the fuel source on the margin. That would help explain why prices throughout the West fell into the low 20s, with some Friday/Saturday package deals in the Northwest slipped below 20 mills/KWh.
Certainly, it is not a sudden availability of water flowing in the Pacific Northwest, which has been bone dry for the past six weeks. Bonneville Power Administration reported that stream flows at The Dalles are only half of average and federal reservoirs started the week at just 70 percent of capacity.
Even though gas prices have also fallen to extremely low levels, traders believe that was a consequence of the low power prices rather than a prime mover. Within California, gas-fired power producers were said to be buying imported power from coal facilities and backing down their own generation.
Continued mild weather contributed by keeping a lid on electric demand. California load topped out at 33,500 MW this week, and even the normally hot Central Valley was pleasant as the days grew shorter and summer headed toward its last gasp.
At the start of the week, California and Northwest peak power was in the 27 mills to 29 mills/KWh range and Palo Verde was reported as much as 32.5 mills/KWh. With nothing to sustain those prices and volumes of trades diminishing, Mid-Columbia dropped to 19.75 mills level and prices at the California/Oregon Border slipped to the 20.25 mills to 21.25 range. Both NP15 and SP15 clocked in at 22.5 mills/KWh. Palo Verde was seen around 24.5 mills but Four Corners undercut that at 22 mills/KWh.
Off-peak prices were reminiscent of the spring water season with Southwest power as cheap as 12.5 mills to 14.5 mills/KWh. California points were down to 17 mills/KWh and Mid-Columbia hit 16.5 mills/KWh heading into the weekend.
Nothing seems to be on the horizon to change the resource picture, and some suggested that it would take a burst of cold weather to drive up loads and prices. More likely though, a late warm spell might hit the region in a few weeks-but given current conditions, there appears little worry that it will lead to resource constraints.
The California list of generation outages swelled a bit to 6,400 MW of outages midweek, then moderated. Among the units reducing output is the brand new Los Medanos facility in the San Francisco region. Owner Calpine said a 115 KV line "requires adjustment." The 550 MW plant was brought into operation with great haste in order to meet the summer emergency that never happened.
With the unit at minimal output of 150 MW, it appeared that some old PG&E units within San Francisco had to be pressed into service by Cal- ISO midweek in order to maintain system reliability. Otherwise, Hunters Point and Potrero stations would not need to be operating [Arthur O'Donnell].
Is It True? Topock Below $2?
Natural gas traders had to double check their price sheets this week to make sure that what they were seeing was true. Prices have fallen to levels not seen in almost 30 months and most key Western hubs were below $2/MMBtu.
Even prices at the Southern California Border hovered around the $2 mark by the end of the week, with PG&E/Topock and SoCal Gas/Topock seeming to be in a downward race, jockeying for the lowest point.
Lack of demand was considered the main reason for the bargain prices, but buyers could not even take advantage of the availability because lines heading into storage were at full.
There was a little bit of a rebound seen Thursday on a late to national benchmarks, but the general buying climate throughout the West expected to remain weak for some time to come.
Permian Basin prices dropped from $2.15 to $1.90/MMBtu while the San Juan price collapsed to $1.50/MMBtu.
A high-inventory OFO on the Northern California system drove Malin down to $1.80 and PG&E CityGate struggled to hold on to the $2.10/MMBtu level. There was little volume reported.
AECO had dropped as low as $2.20/Gigajoule but rebounded to $2.35/Gj- still a steep fall from the $2.73/Gj index price at the start of the week [A. O'D.].
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