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Western Price Survey

October 21, 2005
Power Costs Drop in End-of-Week Trading

The cost of power at the end of the week slipped in line with a major drop in the price of natural gas. While Monday brought a slight increase in the cost of day-ahead power in the West relative to last week, by the end of the week spot prices at trading hubs throughout the region had shed an average of about 10 mills or more. Also contributing to the slippage was the return to service of two units at the Palo Verde Nuclear Generating Station. The Nuclear Regulatory Commission on Friday listed Units No. 2 and No. 3 at the facility as operating at 17 percent and 12 percent capacity, respectively.

Peak-time power at the Southwest hub of Palo Verde opened the week about 5 mills higher than at the end of last week, moving for between 93 mills and 95.75 mills/KWh in early-week trading. The price dropped to a low of 82.50 mills/KWh on Friday. The price of off-peak power at the hub ranged between 65.50 mills and 70.50 mills/KWh at the beginning of the week, but edged down to close to the 63 mills/KWh mark in late-week trading.

Throughout the West, trading on Monday reflected the price of power delivered both Tuesday and Wednesday. Power traders were away from their desks those two days for a semi-annual meeting. Consequently, power delivered Friday was traded in packages together with Thursday power. By Friday the trading schedule was back to normal, with exchanges that day scheduled for delivery early next week.

Despite the outage at the Palo Verde facility, the California Independent System Operator did not appear to miss the electricity this week. Peak load levels generally stuck close to the 31,000 MW mark.

South of Path 15 daytime power ranged from a high of 105.25 mills/KWh in Monday's session to a low of 88.75 mills/KWh on Friday. Off-peak power changed hands for just under 80 mills/KWh much of the week, sloughing off just a few more mills on Thursday for weekend packages.

The price of power north of Path 15 managed to stick pretty close to the SP15 cost. Daytime deliveries in the NP15 zone hit a high of 104.25 mills/KWh on Monday, but sagged down to the low 90s later in the week, reflecting the cooling trend that moved into the region. Nighttime deliveries at NP15 generally attracted between 78 mills and 81 mills/KWh. The exception was recorded in the price of weekend packages, which slipped down to about 70 mills/KWh.

California-Oregon Border peak-time power cost between 5 mills and 10 mills less than power in Southern California, while off-peak power at the border trading post managed to exceed levels at both SP15 and NP15. Nighttime power drew between 81.50 mills and 83.50 mills/KWh at the start of the week, dropping to between 78 mills and 79 mills/KWh on Thursday.

The cost of power at COB and at Mid-Columbia was buoyed by the outage of the Pacific DC Intertie this week. The 500 KV line, which runs from the Northwest into Los Angeles Department of Water & Power territory, was removed from service early this week for scheduled maintenance. When the line tripped unexpectedly in August, LADWP had said it would use this service outage to complete its investigation and resolve the cause of that outage.

Mid-C peak power drew nearly 90 mills/KWh early in the week. By Thursday the price had moved lower by about 5 mills. The cost of power for nighttime delivery at Mid-C trailed the peak price closely. While peak power topped 89 mills/KWh, off-peak power hit a high of 81 mills/KWh in the same trading session. As the daytime price headed down to around 80 mills, the price of off-peak power moved to between 72.75 mills and 77.50 mills/KWh.

Aside from Palo Verde Units No. 2 and No. 3, few major generating facilities were off line this week. More notable was the addition to the grid of approximately 500 MW of power in the past month. The Kings River Conservation District's 97 MW peaker and the Southern California Power Authority's 328 MW Magnolia power plant went into service last month, while the city of Vernon's 134 MW Malburg facility began commercial operation this week. All of these plants are owned by municipal utilities and are primarily dedicated to serving native load [Shauna O'Donnell].

Storage Build-up Brings Price Reprieve

A surprisingly strong buildup in the nation's underground natural gas storage facilities last week sent the price of spot gas in the West somewhere it has not been for a while--the single digits. After the Energy Information Administration weekly storage report showed 75 Bcf added to the underground vaults in the week ending October 14, the cost of gas slid to below $10 at both the producing basins and California receipt points.

Permian Basin gas, which traded for a high of $11.45/MMBtu on Monday found itself being able to attract between $9.78 and $10/MMBtu on Friday. At the San Juan hub, the price dropped by more than $1.50 over the course of the week, closing on Friday at between $9.24 and $9.55/MMBtu.

Natural gas slated for delivery at the California border with Arizona drew a high of $11.60/MMBtu early this week. By the end of the week, gas at Topock had dropped nearly $2/MMBtu. PG&E CityGate deliveries managed to keep in the double digits, opening Monday at between 11.99 and $12.10/MMBtu. Still, the value of the commodity was slowly chipped away at as the week wore on and by Friday the week's low of $10.06/MMBtu was recorded [S. O'D].

Western Electricity Prices
October 17 - 21, 2005
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 82.50-631.73 42.91-819.50
Mid-Columbia 80.25-89 72.25-81
COB 83.25-95 81.50-83.50
NP 15 88.25-104.25 77.50-81
SP 15 88.25-105.25 77-80.25
Palo Verde 80.50-95.75 65.50-80

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

The Western Price Survey is excerpted from Energy NewsData's comprehensive regional news services. See for yourself how NewsData reporters put events in an accurate and meaningful context -- request a sample of either or both California Energy Markets and Clearing Up.

Please contact with questions or comments about this site.

Contact Shauna O'Donnell, editor with questions regarding Price Survey Content.

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