News Services
Resources
CU/CEM Archives CU/CEM Archives:

Order now and save 50%!

CD-ROM archives of Clearing Up and California Energy Markets are available for purchase and delivery.

Western Price Survey / Archives

October 29, 1999
Traders Boggled by High Prices, Mysterious Market Movement

Players in Western electricity markets this week shrugged, pondered and head-scratched in response to price volatility at most hubs. As prices appeared ready to level out by Wednesday, power premiums at the California Power Exchange, having hit 60 mills/KWh for some hours in day-ahead trades for Tuesday and Wednesday, sank considerably on lighter loads-then bounced back for Friday deliveries. "Just when you think there's a trend, one day comes along and changes everything," said one vexed trader.

Market participants found little to agree on when it came to explaining the dropoff and partial resurgence in PX prices. Speculation included the imminent returns to the market of several nukes. Others said that some market stakeholders might have been caught short for November supplies, flooded the market with excess generation, waited for prices to drop and then bought back the power to cover commitments. Another trader wondered whether the partial restoration of transmission capacity on Path 15 affected prices. The north-south path has been derated recently while Pacific Gas & Electric completed maintenance at the Gate substation and until Diablo No. 2 comes back on line. With the substation work completed, capacity on the line has been increased to 1850 MW and will be fully restored by October 30.

High on-peak PX prices of 49 to 55 mills early in the week deflated to 40 mills/KWh for Thursday, as loads coasted down from a high of 560.6 GWh to 540.9 GWh. "We were really surprised" by the PX price for Thursday deliveries, one trader said. "We didn't expect it to come down like it did." PX off-peak prices outpaced that descent, moving between 36.9 mills and 45 mills before falling to 28.35 mills/KWh for Thursday.

When trades for Friday closed, the price for heavy load hours on the PX popped back up to 45 mills, with off-peak shooting to 40.1 mills and the average PX price hitting 43.6 mills/KWh. The general trend of higher prices left traders bewildered. "We've been scratching our heads as to why prices have been so high," said one.

PX prices for low-load Saturday then went even higher-hitting 57 mills for on-peak and 49 mills/KWh for off-peak-when PG&E took Diablo Canyon Units 1 and 2 off line on Thursday due to heavy storm weather. Unit 2, finishing its refueling outage, had been at 30 percent of full power. PG&E hopes to bring the plants back over the weekend.

Prices at other hubs tracked the PX's performance. California/Oregon Border trades drew between 48 and 57 mills/KWh for on-peak supplies, with off-peak prices netting as high as 50 mills/KWh. Mid-Columbia prices peaked in the same range, trading between 47 mills and 58 mills for heavy load and between 42 mills and 46 mills/KWh for off-peak.

The Bonneville Power Administration offered 200 MW of hydro supplies early in the week before reducing that amount to 100 MW for Thursday and Friday. On-peak prices for end-of-the-week supplies delivered into the Northwest were pegged at the higher of 64.5 mills or the PX average market-clearing price minus $1. COB/NOB power carried the same price tag, plus $1.

Prices at other hubs tracked the PX's performance. California/Oregon Border trades drew between 48 and 57 mills/KWh for on-peak supplies, with off-peak prices netting as high as 50 mills/KWh. Mid-Columbia prices peaked in the same range, trading between 47 mills and 58 mills for heavy load and between 42 mills and 46 mills/KWh for off-peak.

Southwestern prices also surged, with Palo Verde trades spiraling up to 53 mills for on-peak power and Four Corners hitting a high of 48-49 mills/KWh. Off-peak prices at the two hubs were considerably lower; Palo Verde traded between 30 mills and 34.75 mills, while Four Corners stayed between 32 mills and 34 mills/KWh. On-peak prices at Midway hovered between 43 mills and 49 mills/KWh.

San Juan Unit No. 4, which began a maintenance outage October 9, could come back on line by November 1, according to sources. Meanwhile, the WNP-2 plant, at 37 percent of full power early in the week, cranked up to 100 percent late in the week. Market observers also said that Palo Verde No. 1, currently undergoing a core reload, could return to service earlier than its expected mid-November target date.

Real-time prices for heavy load hours at the Alberta hub in Canada backed off their recent meteoric ride, trading between 44.7 mills and 138.85 mills/KWh [Jason Mihos].

Generation Needs Juice Gas Prices

High power premiums in electric markets this week aided another week of strong prices in the gas sector. "The market's really being driven by electric generators," said one trader, adding that demand at the Southern California Border "seems to be almost insatiable." Other insiders indicated that end-of-the-month system balancing is probably lending support to prices.

A tight balance between demand and supply at Nova/AECO appears to be fueling price strength at the hub-regardless of the fate of NYMEX futures. "AECO is so strong, it's not responding to the screen like Malin or Topock," one trader claimed. "Transportation is getting squeezed." In response to a Thursday-morning reduction to NYMEX futures prices of about $0.19, AECO only dipped about $0.03, according to reports.

Trades at Topock ranged between $3.06 and $3.15/MMBtu, while Malin idled between $2.96 and $3.00/MMBtu. Prices at PG&E's gas-hungry Citygate point moved between $3.31 and $3.35/MMBtu.

Southern California Border gas continued to draw impressive premiums, as supplies at the hub started off at $3.07 on Monday, roared to $3.18 and cooled to $3.11/MMBtu by the end of the week. San Juan stayed between $2.84-$2.90/MMBtu, while the price range for Permian gas stretched from $2.83 to $2.94/MMBtu.

Ping-ponging prices at the AECO hub flitted between (C)$3.85 and $3.87/Gigajoule early in the week, jerked up to $3.92/Gj and finished at $3.87/Gj.

In transportation news, traders noted that high inventory on the Pacific Gas & Electric system could lead the utility to curtail deliveries going into the weekend. According to PG&E's "Pipe Ranger" Web site, the utility has forecasted excess inventory for October 28 through October 31 but has not announced plans to institute an operational flow order on shipments [J. M.].

Western Electricity Prices
Week of October 25-29, 1999
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 44.7-138.85 mills/KWh 5.80-38.97 mills
California PX (WAC) 40-55.7 mills 28.35-45
Mid-Columbia 47-58 42-46
COB 48-57 43-50
Palo Verde 44-53 30-34.75

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 webmaster@newsdata.com with questions or comments about this site.

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

Energy Jobs Portal
Energy Jobs Portal
Check out the fastest growing database of energy jobs in the market today.
What's New

Utility-Customer Engagement Conference Nov. 17

Taste editorial excellence.