Mid-Week Edition
May 14, 2008
Heat Blast Sends Western Power Prices Aloft

If you didn't know it was May, you could be forgiven for thinking that summer had already arrived. Egged on by a heat wave, electricity values skyrocketed this week, clearing $100/MWh in California.

And it could get worse: The next few days will be a scorcher across the West, as the region will see some of its hottest temperatures since last fall as the jet stream moves into Canada and warm air from the Southwest comes north, AccuWeather said. Even the usually cool Northwest will not escape, as Seattle and Portland are expected to see temperatures in the high 80s and low 90s. Meanwhile, Los Angeles will bake under 98-degree Fahrenheit weather while San Francisco will crack 90 degrees.

Predictably, electricity demand is rising. The California Independent System Operator forecast that peak demand on the grid, which was below 30,000 MW Monday, would reach 34,000 MW today. Tomorrow's forecast: 38,000 MW.

Despite the grid stress, reliability seemed not to be a problem. For the California-Mexico Reliability Center, balancing authorities added generation to meet demand, according to the Western Electricity Coordinating Council. Projected reserves were 9.7 percent of peak demand Wednesday, or more than 1,100 MW above the 4,251 MW reserves requirement.

Two areas seem to have been spared the full fury of price increases. While peak prices in California market centers gained on average $17/MWh from Monday through Wednesday, Palo Verde peak prices actually inched down $2 to an average of $86.31/MWh. One explanation is that Phoenix temperatures, which will reach a high of 87 degrees today, are below the average May high of 94.

Compared to California, peak power increases at the Mid-Columbia hub were more muted, as the area gained only $10/MWh on average from Monday to Wednesday. One possible explanation is that hydro is dampening prices; the U.S. Army Corps of Engineers in Portland has started releasing more water from reservoirs it manages. In the Northwest, many snowpack levels are above average, with some running as much as 273 percent higher, the corps has reported. Cold weather and little rain this spring has delayed runoff, and pushed some water authorities to start releasing water early to prevent a massive deluge later. Nevertheless, nighttime values at Mid-C did not seem to benefit and climbed $16 to an average of $55.62/MWh on Wednesday.

At the California-Oregon border, average peak prices shot up from $87 on Monday to $105/MWh on Wednesday. Off-peak prices ascended $20 to an average closing of $65.86/MWh.

North of Path 15 peak values soared $17 to an average of $112.64/MWh on Wednesday, while off-peak trades rose $13 to $75.16/MWh. South of Path 15 prices were nearly identical.

The San Onofre Nuclear Generating Station's third unit, which carries a power rating of 1,080 MW, finally returned to service this week. The unit has been closed since mid-April for scheduled maintenance and should be back at full power by Friday. At the Diablo Canyon nuclear power station in Southern California, the 1,138 MW first unit was down for scheduled maintenance. No date was given for its return to full power [Kristina Shevory].

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

The Western Price Survey is excerpted from Energy NewsData's comprehensive regional news services. See for yourself how NewsData reporters put events in an accurate and meaningful context -- request a sample of either or both California Energy Markets and Clearing Up.

Please contact webmaster@newsdata.com with questions or comments about this site.

Contact Chris Raphael, editor with questions regarding Price Survey Content.