Power and gas prices soar in California

Unexpected outages of power plants in California leaves the state flirting with power outages for the third straight day. Wholesale power prices on the California Power Exchange averaged $197/Mw-hr yesterday and natural gas prices soared to over $8/Mcf. The high power prices are from an unusual amount of generation out for maintenance and the slow restart of one of the state�s nuclear power plants.

Nov 15th, 2000


Ann de Rouffignac
OGJ Online

Unexpected outages of power plants in California leave the state flirting with power outages for the third day straight. Wholesale power prices on the California Power Exchange averaged $197/Mw-hr Tuesday and natural gas prices soared to over $8/Mcf.

�Our power prices are going nuts,� says Jesus Arrendondo, spokesman for the California Power Exchange. �People were calling us and asking what�s going on.�

The high power prices are from an unusual amount of generation shutting down for maintenance and the slow restart of one of the state�s nuclear power plants following its refueling outage. Less than maximum hydroelectric power in the state is also contributing to the run-up in prices.

The high gas prices are attributed to a cold snap in California increasing demand for heating coupled with increased demand from gas-fired peaking plants.

�Gas prices are ugly out there,� says one senior trader at Aquila Energy, the trading arm of UtiliCorp United Inc.

Gas storage is being drawn down to meet demand which will keep prices from coming dropping very soon even after temperatures warm, he says.

Gas was trading in California on the cash spot market Wednesday around $8.30/Mcf and contracts for the rest of this month were trading around $7.40 to $7.50/Mcf.

Besides the soaring power and gas prices, the California Independent System Operator is struggling again to keep the lights on. Early this morning, the California ISO issued another Stage 1 alert meaning no unit can voluntarily go down for maintenance. The forecast peak demand Wednesday is 33,531 Mw.

The state has only 32,000 Mw of generation but as much as 12,000 Mw are out of service at this time, says Arredondo. The state can only import about 8,500 Mw at any one time. Observers expect the California ISO to issue a Stage 2 alert this afternoon meaning that customers with interruptible tarriffs will be asked to turn off their electricity.

The California ISO did not return calls.

Arredondo also notes that California�s hydroelectric power is probably not running flat out either. There has not been a lot of rain lately, he says.

Tuesday, the California ISO called the state�s utilities and requested that customers on voluntary interruptible tariffs shut off their electricity to avert system failures or blackouts. Southern California Edison Co. (Socal) was asked to shut down 1,000 Mw. No requests have come in yet, says Tom Boyd, spokesman for the utility. Socal only has 1,300 Mw of winter interruptible load, he says.

Two large nuclear units in California are �exiting refueling� and about to be brought back on line, says Breck Henderson, spokesman for Region IV of the Nuclear Regulatory Commission. But Henderson would not say when the plants would actually be producing 100% of their capacity. Sources say it won�t be until November 18 at the earliest for 1,073 Mw Diablo Canyon 1 to be at full power.

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