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Western Price Survey

October 26, 2007
Wildfires Send Prices High, But Values Calm as Transmission Returns

As wildfires spread in Southern California early in the week, major transmission lines went off line and sent power prices in some areas close to $200/MWh.

The wildfires, some of which are still burning, knocked out power to thousands and almost left San Diego Gas & Electric disconnected from the grid and minutes away from calling blackouts on Wednesday (see story at [14]).

A transmission emergency in Southern California, declared by the California Independent System Operator, was in effect for three days. The Cal-ISO also placed generators on restricted maintenance operations.

The transmission woes read like an energy nightmare:

On Sunday, SDG&E took down the 500 kV Southwest Power Link, which runs from the Palo Verde nuclear plant in Arizona into California. The link can carry up to 1,750 MW into San Diego County.

On Monday, Southern California Edison and SDG&E shed load after transmission lines on the Pacific DC Intertie tripped due to fire. Power to tens of thousands was restored in about 20 minutes, but the situation grew worse for SDG&E as the week wore on.

On Tuesday, the utility told California Energy Markets that imports were reduced to 200 MW flowing north from Mexico and 200 MW flowing south from the San Onofre area. By Wednesday, fire forced the last func-tioning 230 kV line from San Onofre out of service. But moments later, the Southwest Power Link came back on line.

Adding to the difficulties in the West, both units at the 2,254 MW San Onofre Nuclear Generating Station have been off line for maintenance. In addition, Arizona Public Service took the 1,340 MW Unit No. 1 at the Palo Verde Nuclear Generating Station off line unexpectedly Monday for plumbing work. It is expected to return next week.

Values reached above $100/MWh at some hubs Monday. As residents evacuated, wholesale power prices fell back down to earth Tuesday.

Prices for peak power at South of Path 15 swung between $73.75/MWh and $190/MWh Monday before settling in the low-to-mid-70s for the rest of the week. Off-peak prices held steady in the mid-to-upper 60s all week, though one exchange reported Sunday 1x16 blocks of $70/MWh.

North of Path 15 peak-power prices jumped almost $20/MWh to $94 Monday, but fell sharply Tuesday and held in the low-to-mid-70s through Friday. Off-peak prices stayed in the mid-to-upper 50s all week.

Peak prices at Palo Verde also swung wildly Monday, moving from $53/MWh to $93 before settling in the low-to-mid-60s through Friday. The price for nighttime power rose from the low 40s to the low 50s through Friday. Sunday 1x16 deliveries went for $63/MWh.

At the California-Oregon Border, peak power cost as much as $83/MWh Monday, but dropped to the upper 60s by Thursday before rebounding to $71 Friday. At the Mid-Columbia hub, daytime deliveries hit $100/MWh Monday and then fell to the mid-60s for the rest of the week. Light power at both COB and Mid-C swung through the 50s all week, though Sunday 1x16 went for $66/MWh on Friday at Mid-C [Charles Redell].

Gas Prices Down Despite High Oil

The U.S. Energy Information Administration reported that the nation added 68 Bcf to its natural gas stores last week, which was more than the industry ex-pected and helped take the steam out of prices. The West added 7 Bcf to bring its stores to 453 Bcf. Natural gas prices around the West followed no clear pattern this week until Thursday's EIA report, when prices dropped at almost every hub.

Despite the run-up in crude-oil prices past $90 -- a situation some traders see as not a supply-demand issue but one of speculation -- natural gas kept cool. At the Southern California Border, prices slipped from about $6.65/MMBtu Monday to $6.12/MMBtu Friday.

Prices at Permian Basin, Texas dropped 30 cents/MMBtu through Wednesday, then rebounded 20 cents Thursday, but lost it all again Friday. San Juan gas lost about 45 cents for the week [C. R.].

Western Electricity Prices
Week's End: October 22 - 26, 2007
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 18.77-787.83 17-373.09
Mid-Columbia 58-100 50-67.25
COB 64-83 52-62
NP 15 67.25-94 50.25-60
SP 15 68.50-190 50-70
Palo Verde 57.25-92.75 41-66

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.

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Contact Chris Raphael, editor with questions regarding Price Survey Content.

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