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Western Price Survey / Archives

November 19, 1999
Falling Power Prices Signal Seasonal Shift in Western Market

Electricity prices throughout the West moved lower this week as cooler temperatures and wet weather settled over California and the Pacific Northwest. In contrast to the relatively high price profile seen since September, spot power has reverted to what many consider a more normal level. In addition, the differential between peak and off-peak pricing returned, signaling a greater push by marketers to move hydroelectricity out of reservoirs to make room for winter precipitation.

"They're out there trying to move some stuff," one utility power buyer reported this week. Coming off a low-load weekend, California state water marketers said they were selling power at an average of 13.4 mills/KWh early in the week.

Day-ahead prices on the California Power Exchange slipped from 38.78 mills on Monday to 33.9 mills/KWh for Friday, while off-peak hung at the 22 mills to 24 mills/KWh level. However, in bilateral markets, that off-peak price was further undermined by transmission congestion into California, and real-time bids just to get scheduled through the California/Oregon Border and constrained Southwestern corridors were as low as 7 mills to 8 mills/KWh during a few slack hours.

While good news for buyers, it was a squeeze for sellers--some of whom reported cutting production to sit out the trough. That wait could take some time. Seasonal weather patterns are emerging in the form of continuing rainfalls in the Northwest that will translate into increased hydroelectric generation. In addition, next week will see the end of the six-week Columbia River flow restrictions to enhance fish spawning.

For the first time in weeks, Bonneville Power Administration posted different prices for its peak and off-peak surplus power, offering daytime energy for 29 mills in the Northwest and 30 mills/KWh at COB but reducing the overnight prices to 19 mills and 20 mills/KWh (subject to CalPX prices).

Mid-Columbia slipped to 18.75 mills daytime and as low as 14 mills to 15.5 mills/KWh off-peak. COB "came off substantially" to the 21 mills/KWh range, traders said, even though NP 15 congestion pushed costs up to 35 mills/KWh. Off-peak in Northern

California was mostly 17 mills to 18.5 mills/KWh.

In the Southwest, Palo Verde and Four Corners headed downward from 30 mills to about 26 mills/KWh midweek. Off-peak was as low as 12 mills/KWh.

The Alberta Power Pool held pretty steady all week in the off-peak periods at 6 mills/KWh, while daytime energy ranged between 30 mills and 65 mills/KWh early then narrowed to 45 mills/KWh. Load on the pool exceeded 7,000 MW in late-afternoon peaks [Arthur O'Donnell].

Gas Moves in Uncertain Spurts

Natural gas markets reversed course several times this week, but the general trend appeared to be heading lower in advance of next week's Thanksgiving holiday. Southern basin and border costs moved slowly downward before catching a slight boost midweek on NYMEX futures movement, while the biggest swings were recorded in Canadian prices.

Alberta hub prices had been on a steep decline since hitting nearly $4/Gigajoule in late October but switched gears midweek. After dropping to as low as $(C)2.55/Gj, the Alberta price rebounded to the $2.90 level before settling at $2.82/Gj.

Earlier in the week, pipelines were too stuffed, and operators faced changing tolerance bands. However, some intra-Alberta demand and somewhat cooler temperatures to the south cleared up the excess. "There seems to be a home for all the gas," one trader noted.

For a short time, the rapid changes in pricing offered pricing advantages from other sources, such as Rocky Mountain producers, but things appeared to even out on Thursday.

San Juan and Permian Basin supplies actually fell below $2/MMBtu early in the week but picked up to $2.06/MMBtu. The Southern California Border price bounced around the $2.50/MMBtu level all week, ending at about $2.45/MMBtu.

Next week will see a trading squeeze, with most transactions for the balance of the month as well as bids for December pushed into a short schedule [A.O'D.].

Western Electricity Prices
Week of November 15-19, 1999
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 30-65 5.8-6
California PX (WAC) 33.3-38.8 19.6-25.4
Mid-Columbia 18.75-25 15.5-16
COB 21-27 17.5-20
Palo Verde 26-30 12-15

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


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