Western Price Survey / Archives
October 22, 2004
Traders returned to their desks Thursday after attending a two-day conference in Portland and found the price of power on the West Coast shooting up like a bullet on the strength of natural gas costs.
Monday saw power changing hands for the following three days of the week, with prices at Western hubs generally holding within the range recorded in the previous couple of weeks. Normal trading resumed on Thursday, with deals that day conducted for power delivered Friday and Saturday. The value of peak power on Thursday was more than 10 mills higher than it had been at the beginning of the week.
Between the Monday and Thursday trading activity, the price of natural gas rose a dollar or more at both producing basins and Western delivery points. For example, gas delivered to the Southern California border at Topock ranged from $4.95 to $5.30/MMBtu on Monday before jumping to a high of $6.62/MMBtu on Thursday.
"Gas is the whole story," commented one trader. "Given the price of gas, the jump in power prices isn't that unreasonable."
Even Mid-Columbia power costs climbed into the 50s by week's end. After hovering around 40 mills/KWh on Monday, peak power ran up to 53.75 mills/KWh at the end of the week. Off-peak power costs nearly met that level as well, topping out at 50 mills/KWh on Friday for power to be delivered early next week.
Power for peak-time delivery at the California-Oregon border changed hands for as much as 58.50 mills/KWh at the end of the week, with off-peak prices at the hub ranging from 32.75 mills/KWh on Monday to as much as 51.50 mills/KWh on Friday.
In California, the price of power in the northern half of the state on Friday hit 66 mills/KWh for daytime deliveries, about 18 mills more than at the beginning of the week. Nighttime deliveries drew a high of 55.50 mills/KWh on Friday, a significant jump from Monday's price of 36 mills/KWh and a boost even from the Thursday price of 46.50 mills/KWh.
The high-water mark for power deals was reached on Thursday, with one index reporting a trade for as much as 70 mills/KWh at SP15. The price notched down by 3 mills the following day to close out the week at 67 mills/KWh, after sitting at about 34.50 mills/KWh for the first four days of the week.
Palo Verde power prices also showed some volatility this week. After opening the week at between 37.75 mills and 41.25 mills/KWh, the cost for peak -power ran up to 58 mills/KWh on Friday for next-week deliveries. Weekend prices nearly reached that level as well, hitting 56.25 mills/KWh in Thursday trading [Shauna O'Donnell].
Pre-Winter Jitters Jack Up Gas Costs
The price of natural gas developed a life of its own this week, moving upward despite the lack of any overwhelming event driving the move. The combination of the continuing high price of crude oil, the challenge of getting Gulf of Mexico production back on track after a spate of hurricanes and both a heat wave in Texas and a cold snap in the East and in Alberta, Canada conspired to push gas costs well about the $6 mark in the West.
The West did not appear to be short of supplies. As reflected on PG&E's California Gas Transmission Web site, the company called four operational flow orders last week and three this week because of high inventory in its system.
Gas delivered to PG&E CityGate was priced at $6.81/MMBtu on Friday, the high mark for the week. On Monday gas was moving for between $5.30 and $5.60/MMBtu. Permian Basin gas started out the week at a low of $4.60/MMBtu but jacked up to around $6.25/MMBtu on Wednesday and stayed in that vicinity the rest of the week [S O'D.].
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