Western Price Survey / Archives
October 15, 1999
Electricity traders throughout the West were still somewhat shell- shocked from this past week's unusually high prices. Building upon a platform of nuclear plant refueling at three facilities in the West, continuing transmission work, a late wave of high temperatures and unexpected generation outages, the market this week scaled heights previously unseen during early autumn months.
While utility loads were not especially heavy, the deficiency of generation due to unplanned outages hit the market hard early in the week. Several units in Southwestern states disappeared from service just as temperatures were moving back into the 100 degree F vicinity in the desert and in Southern California. Adding to the volatility was a tremendous surge in natural gas prices in Canada and at the California border that hit gas-fired generators.
Also plaguing traders was continuing maintenance on transmission lines within California and the related derating of critical Path 15 to 900 MW. The capacity curtailment was supposed to begin two weeks ago but had been delayed because of market turmoil.
Traders also noted transfer constraints at the British Columbia border that seemed to be affecting Northwest imports to California late in the week.
Overall, the situation may have utilities and transmission schedulers rethinking their traditional fall maintenance routines in the face of such market unpredictability.
The California Power Exchange showed a big bell curve this week. Daytime average prices started out at 58 mills/KWh, rose to 87.5 mills on Wednesday, then fell to 60 mills/KWh for Friday deliveries.
During individual peak hors, clearing prices occasionally exceeded 100 mills, with the top price of 140 mills/KWh recorded on Wednesday. CalPX's real-time market was generally quieter, but Tuesday's peak period saw a price of 102 mills/KWh.
Bilateral markets did not quite reach those heights, although there was a very wide range of pricing recorded during the week.
California/Oregon Border prices appeared to lead the class, hitting 70 mills midweek, then sinking to about 45 mills to 50 mills/KWh for Friday/Saturday. COB volatility reflected the difficult NP 15 congestion pricing seen much of the week.
Palo Verde prices were not far behind in a range that went from 46 mills to 67 mills and back again. The Southwestern market took an early jolt with outages at three San Juan coal units and a Four Corners No. 4 maintenance curtailment.
Mid-Columbia was less of a factor in the market and hydroelectric traders were scaling back generation. Bonneville Power Administration erased its off-peak surplus offering midweek and raised the price for surplus firm daytime energy to 59 mills in the Northwest and 60 mills at COB.
Next week, BPA will follow modified hydro patterns meant to enhance fish spawning at Verneta Bar on the Columbia River. The six-week regime will likely reduce daytime generation but loosen some off-peak flows, which could ease the unusually high overnight prices seen in the West this week [Arthur O'Donnell].
Gas Markets Turn on a Dime
Natural gas prices took several big steps higher early in the week before spinning on their heels and giving back much of the on Thursday. Several trading hubs watched prices climb more than $0.20/MMBtu over two days before deflation set in.
Traders were a bit puzzled by it all and simply let the market take its course. "There's fundamentally no reason for this," one utility buyer said. The best explanation appeared to be a "pre- winter rally" and the remarkable volatility of Western electricity prices (see story above).
The Permian Basin and San Juan Basin prices were fairly well aligned, but Southern California Border prices popped over $3.10/MMBtu midweek before softening to $2.99/MMBtu.
The Alberta hub price strayed over a very wide range-from $(c) 3.35/Gigajoule early in the week to as much as $3.81 on Wednesday. By Friday, the AECO hub index had settled to $3.65/Gj [A. O'D.].
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