Western Price Survey / Archives
September 22, 2000
After skirting disaster at the start of the week and enduring a generation scare on Wednesday, California's power market deflated gently on Thursday, as clouds brought welcome cooler temperatures, greatly reduced loads and substantially lower power prices.
More than 10,000 MW separated the California Independent System Operator's high peak load point of 43,069 MW on Tuesday afternoon and Thursday' peak of 32,916 MW. The demand level also reflected the swift drop in power prices at the California Power Exchange, where Wednesday's daytime clearing price of 230 mills/KWh gave way to an almost reasonable 99.8 mills/KWh figure for Friday.
Bilateral hubs also fell in line below the 100 mills mark as tensions eased. "It must be fall," quipped one Southwestern trader, who noted temperatures in Arizona that were even lower than the Palo Verde price of 95 mills for Friday/Saturday blocks-which was half as expensive as PV power just the day before.
The price reductions heading into the first day of autumn signaled quite a change from the frantic activity earlier in the week.
Twice during the week, the unexpected loss of a large generation facility in the Pacific Northwest triggered a deeper level of emergency for the Cal-ISO during its late summer bake. Monday's the Stage Two declaration-the 17th of the year-came immediately after a manual scram at the Columbia Generating Station that forced the 1,150 MW nuclear unit offline. Cal-ISO reportedly came within about 150 MW of declaring a more severe Stage Three but was able to muster about 800 MW of customer curtailments and excess power from the Western Area Power Administration's Hoover Dam hydro generation.
While Tuesday saw an even higher peak load in California at 43,069 MW and a Stage One Alert beginning at 11 am, there was less stress evident and nothing occurred to tip the balance despite some record temperatures for the day in Northern California.
That was not the case Wednesday, however. At first it appeared the worst of the hot weather had passed and Cal-ISO operators were in the process of revising downward their expected afternoon peak figures. Shortly after noon, three Colstrip coal units dropped offline, sending Cal-ISO into the 31st Stage One of the year.
Besides the big plant outages, a unit at Cholla in Arizona dropped offline Wednesday morning and the San Juan No. 1 experienced a slight blip on minor steam system repairs. The Washington nuclear plant was brought into cold shutdown, according to the Nuclear Regulatory Commission. Operators said loss of vacuum in a condenser hose was the cause of the problem. A rather slow return to service was being forecast; it reconnected to the grid Friday morning at 15 percent and hoped to return fully Sunday.
Looking well ahead, nuclear refueling and other generation maintenance could take as much as 10,000 MW out of commission during October, but system operators are hoping that coincides with moderate loads and no system emergencies. Palo Verde No. 2 is already coasting down to refueling, losing about 1 percent of output each day until it disconnects from the grid September 30. San Onofre No. 2 is set for a month hiatus October 7 and Diablo Canyon No. 1 follows on October 8 [Arthur O'Donnell].
Gas-Powered Roller Coaster Ride Continues
Natural gas prices rose early in the week as electric generation peaked and Northern California baked under record-setting temperatures. But with substantially cooler temperatures forecast, plus a positive storage report, prices took a precipitous drop. Perhaps traders were shell-shocked from all the volatility, but Thursday's deals did not stray much further.
"This market has been so wide," one trade said while searching for some number to provide as illustration of a settlement price. Southern California Border prices plummeted as much as $0.50/MMBtu on Wednesday, crashing to about $5.55/MMBtu. The high for the week was as much as $6.30.
As the border price deflated, the spreads between basins narrowed. San Juan closed out at $3.95/MMBtu and Permian eased to $4.95 to $5.00/MMBtu.
The change in gas demand occurred so quickly in Northern California that PG&E had to declare customer specific operational flow orders to restore balances as too much gas was flowing into the system. If the individualized notices do not correct imbalances, the utility may effect system OFOs over the weekend, traders said.
Malin prices declined to the $5 mark after starting out at about $5.30/MMBtu. PG&E CityGate followed along with Topock, dropping from $6.30 to $5.60/MMBtu.
Alberta prices trended higher, rising from $(C)6.40/Gigajoule Monday to $6.48/Gj on Thursday [A. O'D.].
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