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Western Price Survey / Archives

November 16, 2001
Bargains Galore at the Energy Store

Western electricity prices took a deep slide this week, falling to the 20 mills/KWh mark or less at most locations. The deepest discounts were seen at Palo Verde, where the return of two nuclear facilities late last week combined with transmission repair constraints to shut power within the Southwest. Mild loads meant that some parties had to dump excess energy into the real-time market at surprisingly low prices on Tuesday. Traders confirmed peak power deals at 12.5 mills/KWh and off-peak energy bargains at as low as 8 mills/KWh-albeit for very low volumes and short duration. The general prescheduled price pattern was a bit higher, but by Thursday, even those numbers were in the 15 mills to 17 mills/KWh vicinity for peak deliveries Friday and Saturday. Off-peak was seen around 11 mills/KWh. Part of the problem was maintenance on the Palo Verde/Miguel transmission link through California's Imperial Valley that took out one of two 500 KV lines on Tuesday. But even after the line was restored the fact of excess capacity in a "quot;no weather"quot; situation depressed pricing. There was plenty of weather in Northern California and the Northwest, including record-setting rains early in the week along the California coast. Bonneville Power Administration was back as a seller of energy, offering 50 MW day and night at unspecified market prices. For the Northwest deliveries, that market price fell to 17 mills heading into the weekend, with off-peak down to 15 mills. At the California/Oregon Border, the peak price slipped to below 16.5 mills/KWh and the off-peak tariff was 15 mills/KWh. While Mid-Columbia and COB prices reflected the sudden flow of hydroelectricity, in-state California prices were stuck on uncertainties about the return to full service of the Diablo Canyon nuclear facility. One of the twin units was taken down to half capacity for repairs over the weekend, and while owner Pacific Gas & Electric said that Unit No. 1 was back to full early Wednesday morning, the outage was still being listed on the California Independent System Operator's log of unavailable plants. That list reached 14,000 MW midweek, with more than 10,000 MW of scheduled maintenance at scores of facilities across the state. While that may have also been a factor in the stickiness of California prices, by Thursday NP15 was down to 21.5mills and SP15 dropped to the 17.5 mills to 20 mills/KWh range. Both locations had been well above 30 mills at the start of the week. California utility schedulers reported laying off their own generation facilities to take advantage of the bargain prices while they last. That seemed to be contributing to the overabundance of natural gas in state pipelines, leading to even lower fuel prices in a continuing cycle of energy cost decreases. Cal-ISO had been documenting daily peaks in the 30,500 MW neighborhood but bumped up to 31,300 MW Thursday evening. The daily load curve features a big spike at 6 pm with a swift downslide into the night [Arthur O'Donnell].

Gas Falls Below $2 Through West

Natural gas prices exhibited wide spreads each day this week, as if casting about for firm direction. By Thursday, though, the trend was clearly downward and prices at all major hubs dropped below $2/MMBtu. Traders said that increasing supplies in the pipeline had no place to go, and when PG&E declared a "quot;zero tolerance"quot; operational flow order Thursday, prices fell by about $0.35/MMBtu in a single day. The Alberta price collapsed midweek and balance of month transactions were reported at less than $(C) 2.50/Gigajoule. Though the spread of prices for the week was wide at all hubs, the late trading was pretty much all at the low end of the scales. SoCal Border prices covered a broad range from $1.95 to $2.26/MMBtu and San Juan Basin dropped as low as $1.58 after reaching $2.01/MMBtu. Permian Basin prices hit $1.66 on the bottom and $2.14/MMBtu at the top. A fire last week on PG&E's Redwood Path did not seem to significantly affect trading or boost prices even though deliverability has been trimmed by 15 percent. "quot;No one is getting cut,"quot; said one trader. CityGate prices dropped to $1.90/MMBtu from about $2.20/MMBtu and Malin sank to $1.80/MMBtu. The fire at the Gerber compression station on November 6 destroyed a compression generator and building. Some reports put the damage at up to $20 million, but PG&E would not confirm the figure. Capacity on the line is being limited to 1.77 Bcfd, roughly 85 percent of the 2.035 Bcfd winter load on the Redwood Path. Though the limits are expected to be in effect for as long as six months, gas traders pointed to healthy storage levels as a sign that the cuts will not likely have substantial impact on prices this winter [A. O'D.].

Western Electricity Prices
Week of November 12-16, 2001
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 23.5-94.5 6-23
Mid-Columbia 17-27.5 15-25
COB 16.25-31 15-25
NP 15 21.25-33 16-25.5
SP 15 17.5-32 14-23
Palo Verde 15-29 11-18

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


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