Western Price Survey / Archives
October 4, 2002
With California electrical peak demand in California dropping to below 30,000 MW courtesy of a pleasant autumn weather pattern, generation units moved into seasonal repair cycles and Northwest hydro producers began trimming back output to maintain some sort of balance. Without a great deal of need for their services, some 15,750 MW of California units took maintenance leave. About 1,850 MW of that was for unplanned outages. Notable on the list were reductions in output at several major hydroelectricity facilities across the West-from Hoover Dam to Big Creek and Hyatt/Thermalito below Lake Oroville.
Even the Pacific Northwest was cutting back, with generation out of Grand Coulee Dam reportedly 15 percent lower than normal at 1,900 MW.
Power prices were mostly upper 20s to mid-30s across the west, with Mid-Columbia showing a surprising strength early in the week by hitting 30 mills/KWh for the first time in months, before easing to the 26.75 mills to 27.5 mills/KWh range.
The 32 mills to 35 mills/KWh range shown at in-state California points was mostly driven by higher natural gas costs that were reflecting the hurricane fears on the Gulf Coast. As those fears receded with the downgrade of Lili to tropical storm status, power prices slipped a notch or two.
The SP15 price may have been boosted a little by transmission problems on the DC Intertie, which was held to just 950 MW southbound and 900 MW northward this week because of work on ground electrodes at the Sylmar terminus. A ground fault occurred Monday morning at converter station No. 1.
The California/Oregon Intertie was at the season normal 4,000 MW of capacity north-to-south and 2,450 MW south-to-north all week.
There was some excitement in the Northwest when a mysterious suitcase was found at the base of a pedestal at the Wanapum Dam hydro project near Yakima, Washington, on Tuesday. Local sheriffs closed access and a federal bomb squad came to investigate-finding nothing dangerous, however
The Southwest market was lackluster, with seemingly plenty of excess capacity despite the 1,200 MW Palo Verde No. 1 unit entering a repair hiatus over the weekend. PV prices were in the 28 mills to 31.5 mills/KWh range all week, but centered to 29 mills/KWh in late trading. Off-peak was as low as 16.5 mills/KWh at Palo Verde [Arthur O'Donnell].
Low Demand, High Inventory and Hurricane Shut-Downs Hit Gas Markets
"There's a lot of conflicting things going on," observed one California gas trader this week by way of explaining the wide variety of price quotes being thrown around.
The disparity in prices ran not only between basins and borders but also at the same hubs at different times of the trading day. For instance, the Permian Basin on Wednesday showed as much as a $0.60/MMBtu variability in pricing because of the fluid nature of warnings about Hurricane Lili-which at one point was looking like a cannonball racing to destroy Gulf Coast oil and gas production equipment. The storm lost most of its momentum upon hitting round and damage was not nearly as severe as feared, leading to a drop in prices across the nation and in futures markets. Still, some 60 Bcf of gas production was lost during the week, according to industry sources.
Adding to the leveling was a higher than anticipated gas injection of 45 Bcf last week. The market was expecting much less because of the reliance on storage gas after Gulf storms caused massive shutdowns of gas and oil production facilities and reduced pipeline flows while Hurricane Isidore was spinning out of control last week.
Another location of volatility was the San Juan Basin, which has been depressed in the mid $2/MMBtu range while its companion Western points were as much as $1/MMBtu higher. When it looked like there would be a run on Texas gas, San Juan rallied to $3.20 midweek, but then lost steam to fall to the $2.55 to $2.85/MMBtu range.
While the Northern California CityGate stormed the $3.90/MMBtu mark early in the week, it retreated to $3.44/MMBtu with the growing realization that more gas was being stuffed into pipelines than was being taken out. Maintenance on the PGT pipeline that reduce capacity also contributed to higher inventories late in the week, and observers speculated that an OFO was in the making for the weekend.
Everyday the Malin price was bouncing around in a different decade of pricing brackets, ending the week at $3.35-although traders anticipated further erosion heading into the weekend.
The Alberta price had been pulled to $(C) 4.73/Gigajoule, but collapsed to $4.38/Gj on Thursday [A. O'D.].
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