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Western Price Survey / Archives

September 24, 2004
Prices Lag or Linger, Doing Little Else

The weather in California drove loads in the California Independent System Operator's control area progressively higher over the course of this week. Tuesday's peak demand of 33,060 MW was exceeded by more than 1,000 MW on Wednesday and by about 2,000 MW on Thursday. Still, Thursday's actual peak load came nowhere near the projection of 38,597 MW. And even if that figure had been reached, supply was more than sufficient to meet demand.

Power generation in California was in good health this week. Cal-ISO recorded just 2,381 MW as being unavailable in its control area on Monday. That figure doubled as the week progressed, but the curtailments had little effect on either supply availability or prices. In addition, all nuclear-power generating units on the West Coast were operating at full capacity this week.

Two 755 MW units at Duke Energy's Moss Landing facility, No. 6 and No. 7, were on unscheduled outages most of the week. In addition, the 510 MW Moss Landing Power Block No. 2 was ramped down by 260 MW on a planned curtailment that ended in the early morning on Friday. The 335 MW El Segundo Unit No. 4 was off line on an unscheduled outage during the first half of the week as well.

Prices throughout the West responded only slightly to the increased demand. In the NP15 region, peak power attracted between 47.50 mills and 48.25 mills/KWh on Monday and managed to gain only another 2 mills or so by Wednesday, closing that day at a high of 50.25 mills/KWh. The price barely moved the rest of the week before tacking on another mill in trading for next Monday's deliveries. Off-peak power drew between 33.50 mills and 36 mills/KWh during the week.

Further south, prices for daytime power were mostly stuck in the upper forties, peaking at 50.50 mills/KWh on Wednesday. Off-peak power for delivery south of Path 15 remained in the 28 mills to 30 mills/KWh range over the course of the week. The exception to this stasis occurred on Friday, when off-peak power scheduled for delivery early next week drew between 34 mills and 35 mills/KWh.

In contrast to power prices at other Western hubs, Palo Verde power costs actually increased slightly as the week wore on. Having opened in the range of 39 mills to 40.50 mills/KWh on Monday, peak power traded at the hub for between 42 mills and 43.50 mills/KWh by midweek. Power scheduled for delivery on Friday moved for a high of 45.50 mills/KWh.

The price for off-peak power traded at Palo Verde lagged behind that at other Western trading points. After opening Monday between 23 mills and 25.75 mills/KWh, the price spread narrowed, with deals sealed for as little as 22.25 mills/KWh for weekend packages.

Up at the California-Oregon border hub, peak-time power changed hands for between 42.50 mills and 43.75 mills most of this week, with a handful of deals recorded at 45 mills/KWh on Thursday. Off-peak power topped out at 38.75 mills/KWh on Friday after spending much of the week in the vicinity of 34 mills/KWh.

Mid-Columbia power could not manage to break through the 40 mills ceiling this week, reaching a high of just 39.25 mills/KWh for peak-time deliveries. Low-demand power drew between 30 mills and 32.50 mills/KWh on Monday, but hit a high of 37.25 mills/KWh in late-week trading. The rise in off-peak power prices was driven by an incursion of cooler weather into the region.

In other market news, the California Independent System Operator will be implementing Phase 1B of its market redesign and technology update (MRTU) on October 1. The grid manager has been working on developing system software and new interface technologies with its market participants for a couple of years, first under the rubric of Market Design 2002, or MD02, and now under that process's new name, MRTU. Cal-ISO had initially hoped Phase 1B would be ready for rollout last May, but the complexities of the system changes required more time to refine.

Cal-ISO informed both its market participants and the Federal Energy Regulatory Commission that it would be rolling out Phase 1B at 11 pm on September 30 in order for the system to go into effect just after midnight. The crux of this phase of the project was detailed in Amendment 54 to Cal-ISO's tariff. The re-visions were filed with FERC in July 2003 and focused on real-time market operations guidelines.

The changes to Cal-ISO's dispatch system under Phase 1B have required a major overhaul of the grid operator's software. The new system will include significant changes to the real-time automated-dispatch and settlements systems. One major change brought about by the new software is that dispatches will be based not on merit order but on economic criteria that account for minimum run time, variable ramp rate and other generator constraints.

Beginning October 1, Cal-ISO will dispatch automatically every 5 minutes, rather than the current on-demand dispatch that looks at the next 10-minute interval. Units will be committed automatically by the real-time market application, which will simultaneously track out-of-sequence, out-of-market and reliability-must-run instructions. The revamped system will handle and also be able to give facility operators information about the reason for an out-of-sequence or other dispatch [Shauna O'Donnell].

Gas Gets Early-Week Nudge Upward from Futures, Oil Prices

After spending all of last week below the $5.00 mark, natural gas prices at California delivery points rallied somewhat, managing to exceed that level for at least a couple of days this week. Gas costs also increased at the producing basins, but to a lesser extent. Futures prices on the NYMEX had been recording gains for about a week before slipping on Thursday. October deliveries were pegged at $5.564/MMBtu, while November gas moved on the Exchange for $6.219/MMBtu.

Crude oil prices also remained high on the NYMEX, settling near the $48 per barrel figure. The production losses caused by Hurricane Ivan have left stocks at a seven-month low. Concerns over how long the recovery in stocks would take and a drop in imports drove the increase in oil prices.

The price for gas in the day-ahead market reached $5.185/MMBtu at the Topock hub in Southern California on Wednesday. At Malin, natural gas traded for as much as $5.10/MMBtu after opening the week about 30 cents lower. Prices at both hubs dipped in late-week trading, sagging to around the $4.80/MMBtu level [S. O'D.].

Western Electricity Prices
September 20 - 24, 2004
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 49.17-321 10.94-189.76
Mid-Columbia 36.25-39.25 30-37.75
COB 42.50-45 31.75-38.75
NP 15 47.50-51 33.50-40.50
SP 15 46-50.50 28-35
Palo Verde 39-45.50 23-31.25

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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