Western Price Survey / Archives
October 1, 2004
After three days of relatively staid trading and little price movement, power costs across the nation responded to a run-up in the price of natural gas. In the West, power prices recorded an uptick in late-week trading, but the commodity lost some value heading into the weekend.
After opening the week at between 47 mills and 47.50 mills/KWh, peak power delivered north of Path 15 hit a high of 52 mills/MWh on Thursday. Power traded on Friday for weekend delivery wilted to between 45.50 mills and 48 mills/KWh. Off-peak power at the hub attracted between 34 mills and 36 mills/KWh much of the week, but jumped up to 39.50 mills/KWh at week's end.
South of Path 15, peak power traded for slightly less than in the northern half of the state, generally ranging from 46 mills to 48 mills/KWh in the first half of the week. By Thursday, however, peak power at SP15 also drew 52 mills/KWh before returning on Friday to its earlier range. Low-demand power in Southern California changed hands for between 29.50 mills and 31 mills/KWh much of the week. Off-peak power at the hub realized a gain on Friday, however, hitting a high of 35.75 mills/KWh.
An earthquake that shook California's central coast on Tuesday did little to move prices. The quake, with an estimated magnitude of 6.0, struck at about 10:15 am. It was felt in the control room of Pacific Gas & Electric's Diablo Canyon nuclear plant, but no damage has been reported. Throughout the event, the power plant continued to operate.
Diablo and other nuclear facilities in the West--with the exception of San Onofre Nuclear Generating Station Unit No. 3--are running at full output. SONGS No. 3 began a refueling outage this week that is expected to last until mid-November.
Ample supply and unremarkable temperatures in the Southwest continue to keep a lid on power prices there. At Palo Verde, daytime power continued to attract prices lower than at other locations in the West. Palo Verde peak power moved for a low of 35.75 mills/ KWh on Monday before edging up to a high of 42.75 mills/KWh in Thursday trading. Off-peak power at the hub traded for under 25 mills/KWh much of the week, before reaching a high of 31.75 mills/KWh on Friday.
At Mid-Columbia, power slated for daytime delivery moved for between a low of 37 mills on Monday and a high of 40.50 mills/KWh on Wednesday. Reliance on hydropower in the region tempered the effect of the rise in gas prices. Late-week trading at the hub saw a drop in prices of 1 to 2 mills. Nighttime power prices dogged the peak price much of the week, hitting 39 mills/KWh on Wednesday and Thursday. By the end of week the price for off-peak power at the hub was down to between 30 mills and 35.50 mills/KWh.
California-Oregon Border power costs also did not exhibit a great deal of response to the hike in gas prices. Wednesday's peak high of 44 mills/KWh was just 2 mills higher than Monday's price. Off-peak power did flinch in Wednesday and Thursday trading, however, skipping up to between 38 mills and 39 mills/KWh after opening the week at around 33 mills/KWh.
Power supplies in the California Independent System Operator's control area have been ample this week, with few major units off line for any extended period of time. Four units at the La Paloma facility were off line briefly on Monday, but all were back in operation Tuesday. According to Cal-ISO's Web site, total forced outages equaled just 860 MW on Friday [Shauna O'Donnell].
Gas Costs Up in Late-Week Trading
There were few market fundamentals to signal a solid reason for the jump in natural gas prices in late-week trading. Pre-winter jitters appeared to be the most likely explanation. That, along with $50-per-barrel crude oil, pushed the cost of gas at Western producing basins up over the $5.00 mark this week.
At Western delivery points, the price of natural gas also soared. PG&E CityGate deliveries drew $5.03/MMBtu early in the week, but by Wednesday the price ran up to $6.05/MMBtu for some deals. Southern California deliveries at Topock gained nearly $1.00 as the week wore on. Opening on Monday in the range of $4.67 to $4.77/MMBtu, gas at Topock was going for as much as $5.50/MMBtu on Thursday.
This week's Energy Information Administration report on underground storage of natural gas showed injections dropping off. For the week ending September 24, the agency reported 69 Bcf was put in storage, the smallest amount since the injection season began. Still, the overall 3,011 Bcf in storage is 6.5 percent above the five-year average, with the West now holding 9.2 percent more than the region's five-year average of 359 Bcf [S. O'D.].
Archives of the Western Price Survey for the past year are also available online.
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