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Western Price Survey / Archives

December 12, 2003
Gas Rises, Electricity Follows

More than any other factor, the significant swelling in the price of natural gas this week drove up the cost of electricity. The combination of cold weather and high demand bolstered the cost of the fuel. With this driver pushing up electricity prices, power in California and the Southwest exceeded 50 mills/KWh frequently during the week.

The price for natural gas scheduled for next-day delivery did not move below the $5.00/MMBtu mark at any Western trading hub this week. In fact, the commodity price at the Permian Basin stayed well above $6.00/MMBtu much of the week.

Palo Verde peak power opened the week between 44.75 mills and 48.50 mills/KWh. By Thursday the commodity was changing hands for as much as 53 mills/KWh. Off- peak power at the Southwest hub opened the week in the mid-twenties range before gaining up to a dime in late-week trading.

Northwest power came in a bit lower during the week as the region's reliance on hydro power cushioned the effect of the fuel-price rise. Mid-Columbia peak power hovered near the 40 mills/KWh mark much of the week. Off-peak power remained strong at the hub, sticking closely to the 37 mills to 39 mills/KWh range.

Pacific Gas & Electric curtailed its two nuclear units at Diablo Canyon on Wednesday, leaving the two units at 24 percent output overnight. The ramp-down was due to severe ocean swells in the area. The 1,113 MW Diablo Canyon Unit No. 1 dipped to an output of 170 MW of power, as did the 1,105 MW Unit No. 2.

By Friday morning, Unit No. 2 was back at 100 percent capacity. Unit No. 1 reached 65 percent output and was expected to be at full output sometime that afternoon.

The status of the rest of the nuclear generators in the West kept to the recent status quo--with the exception of the refueling-caused outage of Palo Verde Unit No. 2, all were at full capacity this week.

The price surge driven by the curtailments was most significant at NP15. Peak power deliveries at the hub were moving for between 49.25 mills and 53 mills on Monday before moving up to a high of 62 mills/KWh for Wednesday delivery. Off-peak power prices remained strong at NP15 throughout the week and kept to the 41 mills to 42 mills/KWh range in mid-week trading.

Though the Diablo Canyon units were moving back up to full output, the price of peak power in California continued to exceed the 50 mills/KWh level on the strength of natural gas prices. End of week trading at both NP15 and SP15 for weekend delivery stuck to between 50 mills and 53 mills/KWh. Off-peak supply changed hands for up to 36 mills/KWh at SP15 and as much as 38.50 mills/KWh at NP15.

Loads in the California Independent System Operator's control area remained well within reach by the available capacity. For the first three days of the week, loads topped out at about 32,500 MW; according to the grid operator's Web site, about 45,000 MW of capacity was available. With the ramping down of Diablo, Cal-ISO's listing of unavailable megawatts swelled to 11,621 MW on Wednesday, but only 2,288 MW of that was listed as being unavailable because of unforeseen circumstances [Shauna O'Donnell].

Spot Prices Ride on Weather and Futures

The price of natural gas on both the spot and futures markets took off this week. Driven by the first blast of winter that hit the eastern region of the country with force late last week and over the past weekend, a new nine-month high was reported for next month's gas deliveries by the NYMEX. On Wednesday, gas futures hit $7.55/MMBtu. Still, most traders did not see that price as sustainable. With ample amounts of gas in storage for winter, the cost of the commodity eased somewhat in late-week trading.

Spot gas prices in the West soared this week, with many hubs reporting trades at well more than last week's prices. At Permian, a high of $6.80/MMBtu on Wednesday bested last week's top price of $5.08/MMBtu. Even Alberta trades, usually lagging behind the other hubs by a fair margin, managed to keep pace, closing the week at $5.63/MMBtu. PG&E City Gate opened the week at between $5.55 and 5.635/MMBtu, quickly ramped up passed the $6.00/MMBtu mark and held above that level the rest of the week [S O'D.].

Western Electricity Prices
Week of December 8-12, 2003
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 13.64-386.29 10.63-155.95
Mid-Columbia 37.75-46.25 30.25-39.25
COB 46-49 32.25-41.75
NP 15 45.25-62 32.50-43.50
SP 15 48-62 30.50-38.75
Palo Verde 44.75-53 25.25-36.25

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


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