Western Price Survey / Archives
October 1, 1999
A lingering early-Autumn heat wave sat over Northern California this week, driving prices up to unusually high levels and forcing the California Independent System Operator to declare its third Stage One Alert of the year.
While Pacific Northwest generation outages were largely the cause of market turmoil earlier in the week, the Thursday event was brought on by fires near the 500 KV Round Mountain/Table Mountain line near Red Bluff that further limited transmission imports from the Northwest. Additionally, the California/Oregon Intertie was being held to 2,200 MW while availability of the major line separating Northern and Southern California became a daily mystery.
Adding to the resource squeeze was an unscheduled curtailment at Diablo Canyon No. 1. Output dropped to 50 percent of the 1,100 MW unit's full capacity as workers repaired a suction leak on non-nuclear water pumping equipment. The plant was reported back to full power by Friday morning.
Cal-ISO reported peak transmission usage at 40,200 MW during Thursday's alert. While nowhere near record levels set earlier in the summer, the alert signified that available generation reserves had fallen below the established 7 percent margin.
Transmission constraints throughout the region had been limiting marketers' ability to move power into and around the state all week. Of particular concern was that derating of the Path 15 line because of the Diablo Canyon No. 2 refueling outage and repair work at Gates was being scheduled then delayed on a daily basis.
Power prices whip-sawed between high and extremely high levels. The California Power Exchange saw its daily averages run up to 100 mills/KWh during Monday's day-ahead bidding, with the single-hour price spiking to 199 mills/KWh during evening peaks. Prices dropped to half that level the next day, but rebounded again with day-ahead bookings for Friday delivery hitting 63.25 mills/KWh.
The surprise of the week was that prescheduled loads on the PX never rose above 600 GWh and it was not until Thursday that the day-of market saw much action-adding about 525 MW to the PX peak.
On Thursday, bids for surplus energy were already climbing to 158 mills/KWh hours before the Cal-ISO announcement. A burst of interest clogged access to the Power Exchange price pages once the alert went into effect, and marketer activity shifted to meeting the ISO's call for additional reliability services. With ISO price caps lifting as of October 1, preliminary prices for reserve capacity were only slightly above the previous $250/MW limit. Traders expected final numbers to be far different.
"They're scrambling out there," reported a real-time trader who was busily trying to juggle mutating prices and transmission availability figures while closing out the monthly books.
Other regions had been up and down all week trying to follow the PX trail. Ranges were wide and fluctuations wild and prices were still a moving target. Hedging its bets, the Bonneville Power Administration set its late-week surplus power prices at 44 mills in the Northwest and 45 mills/KWh for COB/NOB deliveries but reverting to the PX price if higher-which it was.
The Southwest was relatively isolated from the action, although reported prices at Palo Verde bounced up and down between 30 mills and 56 mills/KWh. Off-peak prices were relatively low and steady from 17.5 mills to 19 mills/KWh, compared to the 35 mills to 40 mills/KWh figures recorded elsewhere.
Southwestern marketers continued to point to low prices they needed to bid to access the California market because of transmission constraints [Arthur O'Donnell].
Gas Spins and Turns
Natural gas prices rose and fell in response to electric generation markets, this week, which is to say that day-to-day spreads between regions were highly elastic. The general trend was for a mid-week bulge followed by serious price erosion, but that was before California's power market was energized by a system alert and demand for additional generation.
Southern California Border prices moved from $2.74 to $2.85 and back to about $2.67/MMBtu while basin prices followed the trend at lower levels. San Juan climbed from a low of $2.18 to a high of $2.50, then settled in around $2.30/MMBtu. Permian Basin supplies landed anywhere between $2.27 and $2.34/MMBtu.
While the first snows of the season were falling in Alberta, so were prices. The AECO hub index rose from $(c)3.13 to $3.30/Gigajoule, but then fell precipitously to about $3.10/Gj at week's end [A O'D.].
Some Northwest Outages Will Linger
At least 2,500 MW of Pacific Northwest generation was forced offline at some point on Sunday, September 26, with coal-fired units at Boardman, Centralia and Colstrip reporting outages. Most were short- term, except for more serious trouble at Colstrip Units No. 1 & 2 in Montana, which were taken out of service following a fire at Unit 1's main transformer bus. Montana Power said the cause of the fire was still undetermined. While an investigation and analysis is being completed, Unit No. 1 was expected to remain out of service for three weeks and Unit No. 2 for one week. Neither of the 330 MW plants was directly damaged.
Later on Sunday night, Colstrip No. 3 tripped temporarily for unrelated reasons, but the 750 MW plant was reported back in operation within an hour.
The unit outages exacerbated a perceived power shortage in California brought on by a scheduled refueling at Diablo Canyon No. 2 that began last weekend [A. O'D.].
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