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Western Price Survey

September 23, 2005
Power Prices Caught in the Whirl of 'Cane

Power prices this week in the West surged with the inflation of natural gas costs. Fears of more devastation in the Gulf Coast have pushed up the price of the commodity substantially, driving the cost of electricity generated in the West as high as 116 mills/KWh, despite unremarkable load figures.

In California Independent System Operator territory, peak demand stayed below the 35,000 MW mark this week. The current health of the region's nuclear plants contributed to the ample amount of generation available for trade and helped dampen any pressure on prices from the supply side.

After ramping down late last week on account of high sea swells, both units at Pacific Gas & Electric's Diablo Canyon facility were back at full power this week. Few other major units were forced off line.

Units No. 1 and No 2 at the Mohave Generating Station were forced to curtail by anywhere from 120 MW to 170 MW every day this week, but most other generation listed as being off line by Cal-ISO was ramped down for scheduled reasons. Helms Pumping Station Units No. 1-3, a total of about 1,200 MW, were all on planned shutdown this week, as was the 312 Pittsburg No. 5 unit.

Peak power attracted between 88.25 mills and 93 mills/KWh in the NP15 zone on Monday, about where it left off at the end of last week. By Thursday, the cost of daytime power climbed to 116 mills/KWh. Off-peak power ranged from 65 mills/KWh at the beginning of the week to a midweek price of 83 mills/KW, before scooting up to a high of 92 mills/KWh in Friday trading.

In Southern California, the price of daytime power ranged from 88 mills/KWh on Monday to 116 mills/KWh on Thursday. On Friday the price slipped in tandem with a slight drop in the cost of natural gas. Peak power at SP15 attracted between 100.75 mills and 110 mills/KWh on Friday. Off-peak power changed hands at the hub for 83 mills/KWh on Wednesday, having gained nearly 20 mills since the start of the trading week. By Friday the price had increased to 90.75 mills/KWh.

At Palo Verde, peak-time power traded for between 79.25 mills and 86.75 mills/KWh on Mon-day before hitting a high of 107.75 mills/KWh at the end of the week. Off-peak power at the hub drew around 60 mills/KWh on Monday, but took off on Wednesday, when the price exceeded 75 mills/KWh. By the end of the week that price seemed a bargain, as off-peak power traded on Fri-day for as much as 87 mills/KWh.

Northwest power drew a high of 99 mills/KWh at the Mid-Columbia hub on Wednesday, up from Monday's range of 77.75 mills to 82.50 mills/KWh. Off-peak power at Mid-C changed hands for as much as 79.50 mills/KWh this week.

Cal-ISO released a preliminary report on the August 25 loss of the Pacific DC Intertie and the load shedding that followed. In order to maintain system reliability, the grid manager had to call upon Southern California utilities to shed approximately 1,700 MW--900 MW of firm load and 800 MW from customers on interruptible tariffs. The discussion of the event underscored the need for better communication between control areas, said the ISO in its September 22 report.

The Los Angeles Department of Water & Power, which partially owns and operates the line, did not contact Cal-ISO to inform personnel of a problem, and the ISO was not able to get a hold of anyone at LADWP to discuss the trouble. The ISO concluded that the operators on duty in its control room reacted to the outage of the line appropriately, but was greatly troubled by the difficulty in reaching LADWP personnel. A final report on the incident will be issued by Cal-ISO by October 21 [Shauna O'Donnell].

Rita Raises Gas Costs

Hurricane Rita, graded a Category 5 storm earlier this week, is whirling and weakening on her way across the Gulf and coast of Texas. Still a very large hurricane, Rita is currently packing 125-mile per hour winds and graded Category 3. She is expected to make landfall on Friday and is ex-pected to weaken further over the weekend.

With oil and natural gas production still on the mend from Hurricane Katrina's destructive forces, the prospect of another hard-hitting hurricane hitting the region has given traders the jitters. Day-ahead gas values gained between $1 and $2/MMBtu in the Monday through Wednesday trading period before slipping by about two bits in late-week trading.

Permian Basin gas, for example, traded for a low of $9.85/MMBtu on Monday before being driven up to a high of $12.95/MMBtu on Wednesday. PG&E CityGate gas stayed above the $10 mark this week, topping out at $11.52/MMBtu on Wednesday.

Nervertheless, these prices pale in comparison to those in other regions of the country. The spot-market price at Henry Hub hit $16/MMBtu at midweek, while natural gas on the East Coast traded for as much as $17.15/MMBtu [S. O'D.].

Western Electricity Prices
September 19 - 23, 2005
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 25.68-430.41 7.69-319.31
Mid-Columbia 77.75-99 67-81
COB 80-102.50 64.50-90
NP 15 88.25-116 65-92
SP 15 88-116 65-87
Palo Verde 79.25-107.75 59-90.75

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

The Western Price Survey is excerpted from Energy NewsData's comprehensive regional news services. See for yourself how NewsData reporters put events in an accurate and meaningful context -- request a sample of either or both California Energy Markets and Clearing Up.

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Contact Shauna O'Donnell, editor with questions regarding Price Survey Content.

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