Western Price Survey / Archives
October 12, 2001
Power prices started the day Thursday on a high note as traders speculated that outages at three major nuclear units and dozens of other plants would drive up demand for power. However, the attempted rally soon short-circuited as actual loads showed a more than healthy reserve margin across the West.
The surprise of the week was a decision by Arizona Public Service Company to pull its 1,270 MW Palo Verde No. 2 from service Wednesday morning to fix problems with a control rod assembly. Palo Verde No. 3 was already in refueling hiatus beginning last week, so the combined loss seemed to be a reason for sellers to seek higher prices as natural gas demand and pricing moved higher. Also in the mix was 11,000 MW or so of thermal and hydro units out for seasonal repairs, plus the planned outage of Southern California Edison's San Onofre No. 2 beginning Saturday.
SONGS has been having a problem with steam flows to its turbine and operators earlier this month scheduled a 20-day outage to find and correct the problem with one of the unit's moisture separator reheaters. The problem of steam somehow not making it to the turbines has been on operators' minds since January, but it seemed to be increasing in recent weeks. Edison emphasized that the problem in in non-nuclear systems and "at no time did the MSR pose a risk to nuclear safety."
(Editor's note: The Nuclear Regulatory Commission this week shut down its public Web site in order to limit information access by terrorists. Nuclear owning utilities have so far been good about reporting outages at their facilities, but not the lesser events usually reported through the NRC.)
Though power prices bumped up to 28 mills/KWh in California and the Southwest at the beginning of trading Thursday, traders said there was no sustaining demand and prices dropped quickly to the same 22 mills to 25 mills/KWh level seen all week. SP15 set the high-water mark at 28.75 mills/KWh. On Friday, prices picked up a little, but were seen within the same ranges set earlier.
The California Independent System Operator's afternoon peak loads barely crossed the 30,200 MW mark, leaving plenty of surplus generation despite the increased number of units that were not available for service. On the gas-fired agenda, there were more scheduled outages than unplanned shutdowns, although a key resource at Mohave Generating Station tripped on Wednesday morning, taking 720 MW off line. Unscheduled repairs were reported in all California territories, with the larger units including the 750 MW Ormand Beach No. 2, the 682 MW Pittsburg No. 7 and five units at Encina combining for 350 MW. A mix of planned and unplanned repairs were reported at El Segundo, Alamitos and Long Beach. Lots of hydro units are still off for seasonal maintenance.
Palo Verde rumbled between 22 mills and 27.75 mills/KWh during the week, while SP15 and NP15 were tightly coordinated. Though they hit 28 mills or more, the price dropped again to 23.5 mills/KWh.
Mid-Columbia and California/Oregon Border prices were a tad lower in the 23.5 mills to 27 mills/KWh range after starting the week at around 22 mills/KWh.
Off-peak rose a bit, running in the 13.5 mills to 16 mills range in the Southwest and between 16.75 mills to 22 mills/KWh in California and the Northwest [Arthur O'Donnell].
Gas Turns Bullish
All of a sudden, natural gas markets burst into a frenzy of activity as traders and producers finally saw an opportunity to capture higher prices this week. Though the midweek release of storage figures told the same story as in previous weeks, the AGA report became a trigger for a changed market strategy. Outages at three Western nuclear plants gave a boost to demand, despite a relatively mild weather and load picture. Suppliers reportedly cut back a bit on what they were releasing into the market and the results were remarkable. The previously sluggish Topock index roared to $2.30/MMBtu and Southwestern basin prices popped to the $2.16 to $2.17/MMBtu range.
Northern California points and hubs also jumped by about $0.45/MMBtu, with the PG&E CityGate hitting $2.34 and Malin following to $2.20/MMBtu.
The Alberta index also ran up, from a starting point of $(c) 2.20/Gigajoule on Monday to over $3.00/Gj [A. O'D.].
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