Western Price Survey / Archives
December 1, 2000
The California Independent System Operator issued a system warning that it might be resource deficient Thursday and asked for 4,000 MW of supplemental energy bids, but it did not have to call a staged emergency. The crisis, if there is one, came in the form of power prices hitting the 250 mills/KWh cap and sticking like Velcro. " It hasn't come down at all," sighed a Northern California utility scheduler.
Bilateral prices at Palo Verde and Four Corners were somewhat lower than those on the California Power Exchange, so sellers devoted whatever excess they had to "feeding the beast."
Overall system loads at Cal-ISO were not high-generally less than 33,000 MWh at peak-but continued generation maintenance outages, a remarkable run up of natural gas prices and lingering anxiety about the whole marketplace drove prices to unprecedented levels for late November. CalPX daytime prices pinned at 249.9 mills/KWh all week, while the off-peak price went from 240 mills to 199 mills midweek before picking up to 218 mills/KWh for Friday deliveries.
California/Oregon Border and Mid-Columbia buyers outbid the limits, with prices up to 275 mills/KWh at peak. NP15 tagged along at 240 mills to 250 mills for peak and about 190 mills/KWh for off-peak.
Even the return of Bonneville Power Administration to the sellers' market had little impact on the Northwest price. BPA offered 300 MW in the 7 am to 10 pm period priced at the Dow Jones index for Mid-C or COB. With the weekend, though, BPA pulled its offers.
Bilateral prices at Palo Verde and Four Corners were in the 170 mills to 177 mills/KWh range before dropping to 140 mills/KWh for the weekend.
Although the Diablo Canyon Unit No. 1 finally returned to full service Wednesday, a circulating pump problem at San Onofre No. 2 reduced output there to just 80 percent. Also, Diablo Canyon operator Pacific Gas & Electric has confirmed that it intends to take Unit No. 2 down to "hot standby" mode late Friday for four days in order to clear debris and barnacles from its cooling-water intake system
Besides an estimated 9,500 MW of scheduled maintenance in the West, several unplanned outages were scattered through the region. Among publicly reported problems were trips at Centralia, Four Corners No. 5, the Jim Bridger station, Intermountain Power Plant and Colstrip. As previously reported, AES is limiting generation at its three SoCal plants to about half because of air-quality limits [Arthur O'Donnell].
Gas Markets Lose Cool
"The market is out of control." That was the assessment of a senior Southern California Gas manager this week, and possibly a consensus opinion across the industry as prices for gas deliveries into California topped $20/MMBtu.
National markets responded negatively to an American Gas Association storage report that showed 146 Bcf of withdrawals-far beyond what analysts had been projecting. The news pushed NYMEX contract prices for January to a high of $6.73; February prices were not far behind at $6.53/MMBtu.
In the here and now of Western spot market activity, the interrelationship of electricity and natural gas was evident in a circular loop of cause-and-effect. Unit outages and cold weather pushed electric prices to their limits, raising demand for fuel and taking the lid off what generators were willing to pay for supplies. Trapped in the loop was Southern California Edison, which complained to regulators that the high gas price index expected for December will cause it to pay independent generators more than $100 million above the November energy price, because independent power contracts are tied to a border gas-index.
It was not just the SoCal Border price that took off. Costs at Malin and the PG&E CityGate seemed to be in a race to the stars, and at times the northern basin prices were slightly higher than the border benchmark. "We're just surrounded by high prices," a utility buyer complained.
The SoCal Border/Topock price began the week about $15.50/MMBtu and there was talk of desperation buying at $25/MMBtu, although confirmed trades seemed to be in the $18.50 to $20/MMBtu range Thursday. The squeeze on pipeline capacity was largely the cause of the huge disparity between basin and border costs. San Juan Basin prices jumped from $5.61 to $6.30 after the Four Corners electric plant lost a 770 MW unit on Thursday. The Permian price bumped up half a buck to $6.25/MMBtu.
In Northern California, Malin and the PG&E CityGate were in the $13 to $16/MMBtu range. Anyone looking for an alternative from the Sumas border hub found only the same premium price tag.
In Alberta, the index price started the week at $(C)8.16/Gigajoule but rose to $8.30/Gj late Thursday [A. O'D.].
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