Western Price Survey / Archives
December 3, 2004
Cold weather moved into California over the Thanksgiving Day holiday weekend, with temperatures helping to boost the price of power throughout the West. The low temperatures also significantly influenced natural gas prices and across the country gains were recorded in early-week gas trading. The rise in gas prices--coupled with the cool weather--moved electricity prices up as high as 83.50 mills/KWh in Southern California this week.
Having opened the week trading between 68.25 mills and 80.25 mills/KWh, SP15 peak power hit the 83.50 mills/KWh mark on Wednesday. A drop in price was recorded the following day, as weekend packages attracted between 67 mills and 69 mills/KWh. Off-peak power prices at SP15 hit a high of 65 mills/KWh on Wednesday. The low for the week was recorded on Monday--48 mills/KWh.
In Northern California, freezing weather drove the cost of power up to 81 mills/KWh for daytime deliveries on Monday. The price for peak-time power hovered close to the 80 mills/KWh mark the first half of the week before dipping to between 68 mills and 70.25 mills/KWh for weekend packages. Off-peak power changed hands for as much as 63.50 mills/KWh. During last week's truncated trading session, NP15 peak-power costs ranged from 51 mills to 64.50 mills/KWh, in range with this week's off-peak prices.
The price for power also swelled in the Northwest, with Mid-Columbia peak power reaching a high of 58 mills/KWh on Wednesday. The cost of off-peak power in the region reached a high of 54.75 mills/KWh at mid-week., dropped down to about 48.50 mills/KWh on Thursday then regained its footing on Friday, closing out at 54.50 mills/KWh.
The Western Electricity Coordination Council reported that all five units at the Four Corners Generating Station tripped off line Tuesday afternoon, taking 2,600 MW of power suddenly off line. The loss, which occurred at about 2:30 pm caused a slight frequency dip on the Western grid. The event that led to the shut off of the generating units was a breaker fault.
The California Independent System Operator had to scramble a bit to replace the sudden loss of 760 MW from the generating station that is imported into California from the New Mexico facility but no service disruptions occurred [Shauna O'Donnell].
Big Oops Causes Gas Market Stir
According to the Energy Information Administration, the November 24 posting on the agency's Web site that 49 Bcf of natural gas had been withdrawn from underground storage in the prior reporting period was in error. The correct figure should have been 17 Bcf. The incorrect figure, reported on the Wednesday morning before the Thanksgiving holiday caused prices in the December futures market to jump significantly during trading that day. By comparison, this week's report reported a withdrawal of 5 Bcf for the prior reporting period.
For its part, the EIA did not clarify or correct the error until this week Thursday, when it released its next weekly report. Reports are typically issued Thursday morning but the day was moving up on account of the holiday last week.
In the few hours of trading after the withdrawal numbers were issued last Wednesday, the price for December futures contracts jumped by as much as 22 percent, or more than $1.00/MMBtu on account of the unexpected large withdrawal from storage. The price hike was exacerbated by the fact that the reporting day coincided with the last day available for trading for December contracts.
The mistake drew calls from gas-market participants for EIA to post storage injection and withdrawal figures daily. That way there would be a more rapid understanding that a posting was in error and the amount recorded would reflect only one day, rather than an entire week. Others in the industry criticized the EIA for waiting until nearly a week went by to officially recognize the error and called on the agency to change its policy of only issuing revisions to its storage numbers weekly.
ANR Pipelines, an El Paso Corp. subsidiary, took responsibility for providing EIA with wrong data, characterizing it as a "typo." It appeared to be an innocent mistake.
An escalation in gas prices in the spot market was evident in a comparison of this week's costs and last week's prices as well. It is difficult to say what part of the price rise was in response to the futures market and what part to the very cold weather in the region.
Natural gas prices at the Southern California border delivery point at Topock ran as high as $7.50/MMBtu this Monday, before shedding 20 to 30 cents the following day. In Northern California, Malin gas attracted a high of $7.19/MMBtu at the beginning of the week, before dropping to between $6.70 and $6.97/MMBtu for the Tuesday and Wednesday trading days. By comparison, last week at this time, Malin gas stayed below the $6.00 level, topping out at $5.72/MMBtu. Topock gas drew a high of $6.18/MMBtu last week [S. O'D.].
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