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Western Price Survey / Archives

November 5, 1999
Power Prices Go to Extremes

Western power prices exhibited an extreme case of the "ups & downs" this week with few clear explanations for the rapid changes. Nuclear plant outages, transitional weather patterns and transmission line repairs all played a part in the volatile market. The one element missing was consumer power demand, which remained moderate.

By one measure-California Power Exchange day-ahead clearing prices for peak hours-the high point of the week came during bidding for deliveries on Monday, November 1. Daytime CalPX prices hit an average of 92 mills/KWh, largely because of continued limits on power from the Diablo Canyon nuclear complex due to ocean turbulence. Additionally, unseasonably warm weather and a brief outage at two Colstrip power units seemed to add to pricing pressures throughout the region. In bilateral trades, power at Mid-Columbia and the California/Oregon Border moved at prices up to 70 mills/KWh.

With one of the Diablo Canyon units back to full power on Tuesday and the second unit returning slowly, prices eased into the 58 mills to 62 mills range for two days before blowing up to 80 mills/KWh for Thursday. Although some individual hours ran over 108 mills/KWh, the peak did not last and bids for Friday deliveries dropped to the 51.2 mills/KWh level.

The other remarkable price trend was seen in off-peak hours, as the CalPX price rose from 36 mills to 42.8 mills/KWh through the week. Bilateral trades were mostly in the 38 mills to 41 mills/KWh range-a noticably high price for overnight power.

Traders said that hydroelectric generation appears to be at a lull, with operators holding back production until autumn rains appear.

Despite the high plateau of pricing in Northern California, transmission situations caused a rift in the marketplace, with Southern California and Southwest paths recording very low congestion prices that isolated and depressed power trades.

After the early week volatility, Palo Verde and Four Corners day prices fell into a comfort zone of 29 mills to 34 mills, with off-peak power hanging around 20 mills/KWh midweek. Late trades for Friday/Saturday were a bit higher at 36 mills to 38 mills for peak periods and lower to 18.5 mills/KWh for weekend off-peak power.

What most mystified utility schedulers were the vast discrepancies among zonal congestion prices compared to the CalPX unconstrained market clearing price (MPC). "The unconstrained price isn't relevant to anything," one Arizona scheduler complained. However, the situation points out an unusual feature of the California market: congestion on Path 15 leads to higher prices in the north but depresses prices from the south as sellers bid lower to get in the transmission queue.

Besides the usual congestion along Path 15-which still had not been restored to full capacity after the Diablo Canyon outages-repairs on the DC Intertie limited Southern California municipal utilities' ability to import about 1690 MW of the 2870 MW rated capacity on the NW to Sylmar line.

This week, new operational ratings for winter were put into effect for the major interties, but the California/Oregon Intertie will drop to just 2400 MW over the weekend for maintenance [Arthur O'Donnell].

Natural Gas Has No Place to Go

After starting the week with a buying binge to make up for lost nuclear generation, gas traders watched prices retreat across the West. The biggest erosion was seen in Alberta prices, which fell from $(C)3.45/Gigajoule to $3.27/Gj by the end of the week.

"We have no load," explained one utility gas buyer. With nuclear units at Diablo Canyon returning to service and temperatures moderating, natural gas was already being discounted by sellers.

With fuel being pulled from storage based on prior demand expectations, pipelines out of Canada were fully loaded but the gas had no place to go. Pipeline operators changed tolerance levels late in the week to try to balance their systems. Though something less than an OFO, the action served to put shippers on notice that their withdrawals need to match their reservations.

The Southern California Border price slipped from $2.99 early in the week to about $2.91/MMBtu on Thursday. San Juan and Permian Basin prices tried to hold out against the tide but also eventually fell to the $2.56 to $2.65/MMBtu range. Both basins appeared to center at $2.61/MMBtu on Thursday [A O'D.].

Mexico Utility Joins CalPX

The California Power Exchange this week welcomed the Comision Federal de Electricidad (CFE), Mexico's national utility system, as a participant. The international move further signals CalPX's intent to expand beyond state borders "to become a regional power market for western North America," said CalPX chief executive officer George Sladoje.

Interconnections will be located in Tijuana on the Mexican side and in the Imperial Valley on the US side of the border [A.O'D.].

Western Electricity Prices
Week of November 1 - 5, 1999
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 27-65 mills/KWh 5.8-34.7 mills/KWh
California PX (WAC) 51-92 36-42.8
Mid-Columbia 44-70 38-40.5
COB 51-68 38-42
Palo Verde 29-38 18.5-21

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


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