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Western Price Survey / Archives

October 6, 2000
Market Has Nowhere to Go but Down

After sending mixed messages about direction earlier in the week, Western power markets turned lower across the board in advance of the weekend. While it is a "normal" occurrence for Friday/Saturday blocks to trend lower, the summer crisis has redefined "normal" to mean sustained higher prices that move up with the slightest provocation.

That was the case Monday, as uncertainty about Palo Verde outages and the disappearance of surplus Northwest hydropower outweighed the certainty of moderate weather and reduced demand to press prices up to the 150 mills to 160 mills/KWh range at bilateral hubs and on the California Power Exchange's day-ahead market. The move was not in lock-step, however; the best term for price differentials might be "phase variance," because as the PX moved lower when bilaterals jumped and vice versa.

That changed Thursday as the PX dropped to 122 mills/KWh for Friday deliveries and hubs around the region moved even lower.

The Southwest, while still experiencing temperatures above 90 degrees, decided that two Palo Verde nuclear units was enough for current conditions and slipped to the 95 mills to 100 mills/KWh level. Unit No. 3 finally returned to full power by Thursday, allowing operators to take Unit No. 2 offline for its scheduled refueling.

Even with the large unit out of service, there appeared to be power to spare for bidding into California, which helped drive zonal prices lower, particularly in off-peak hours. The congested price into Southern California helped pull Southwestern overnight prices down to 50 mills to 60 mills/KWh, compared to the California off-peak index of 90 mills to 98 mills/KWh.

In the Northwest, Bonneville Power Administration was largely absent from surplus sales this week, posting a very limited return for Sunday and next Monday of just 100 MW overnight at CalPX-based prices. The Mid-Columbia peak price had been as high as 160 mills previously but drifted down below 105 mills/KWh for the weekend package. Off-peak was seen at 75 mills/KWh.

The California/Oregon Border price dropped from a similar high point to 115 mills/KWh, but lingering congestion pushed the NP15 price to 125 mills/KWh, partly because of the repairs at Moss Landing. Off-peak at COB dropped to 82 mills to 85 mills/KWh traders said.

Next week may see precipitation in the northern part of the market, which will be balanced against continuing nuclear refueling and fossil unit maintenance outages. Palo Verde will be joined Saturday by San Onofre No. 2, already coasting down to about 89 percent, and Diablo Canyon No. 1, which is expected to take off for a month by midweek [Arthur O'Donnell].

Gas Market Turbulence Gives Way to Equanimity

The gas market started the week on an anxious note, as Hurricane Keith threatened Gulf supply regions and wreaked havoc, plus caused half- dozen fatalities. But as the storm was downgraded national prices flattened then fell on a positive gas injection report. That was the national market; in the West markets nodded to the price trends but moved on somewhat higher demand from power generators replacing nuclear and coal facilities. Some reported that in contrast to the strong injection report by the American Gas Association, some parties were selling gas out of the ground in Southern California because it was more favorable than paying border prices.

"I cannot believe how consistently gas has been over $6.00" at the Southern California Border, said one trader. That was the mid- point for this week's prices, which ranged from $5.85/MMBtu to $6.15/MMbtu.

Basin prices moved back into alignment after wide disparities last month, but that meant a big increase at San Juan, which topped $5/MMBtu briefly before slumping to $4.65/MMBtu. Permian supplies were in the $5.14 to $5.25/MMBtu range.

In northern markets, a sizeable curtailment on the ANG pipeline affected deliveries south of Kingsgate and at Stanfield, but a high inventory situation on the PG&E pipeline put downward pressure on prices into California. Though shipper-specific so far, the OFO could be more widespread this weekend, traders said. Malin fell from $5.80 to $5.65/MMBtu late in the week while the PG&E CityGate softened from $5.90 to $5.68/MMBtu.

The drop in prices in Alberta was attributed to slacking fears of supply disruptions this winter and the AECO hub slipped from $(C) 6.80/Gigajoule to $6.54/Gj [A. O'D.].

Western Electricity Prices
Week of October 2-6, 2000
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 80-504 75-90
California PX (WAC) 122-159 85-98
Mid-Columbia 105-160 75-90
COB 115-165 82-100
Palo Verde 95-160 50-65

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


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