Hydro Dries Up, Sends Northwest Off Peak Power Soaring

Power prices for Wednesday delivery were on the substantial rise across the West Coast today. Markets in California and the Southwest were inspired to the upside by stronger demand projections and rising natural gas costs while Northwest markets leapt higher by the double-digits as hydropower supplies continue to ease.

Meanwhile, the depletion of hydropower availability, which had been keeping pressure on the off peak markets across the board in recent weeks, led to substantial gains in light load trading as well.

Power prices were on the substantial rise in the Northwest, where the peak hydropower run-off season concludes, forcing traders to turn to more costly forms of generation. At Mid-Columbia deals for Wednesday were done at $39.00-$48.00, adding a whopping $12.00 on average just a week or two removed from single-digit values. Off peak values also ran rampant to the upside, trading up from a low deal of $0.25 last week up to a gaping $21.25-$35.00 spread as the point added $15.00 on average.

California/Oregon Border deals also found some support from the loss of cheaper hydroelectricity as COB on peak added $8.00 on average with deals at $47.00-$53.50 while off peak COB was pegged at $22.25 up to $34.50, a gain of over $13.00 on the day on average.

Demand is also on the rise in the Northwest, which traders said offered additional support, as loads were called at a peak near 44,500 MW today. Meanwhile, traders found little pressure from improvements in output at the 1,200 MW Columbia Generation plant, which increased production from 85 percent power through last week and yesterday up to full capacity this morning.

The gains were also noted further south as traders pointed to decreased hydro availability sending light load soaring while higher natural gas prices and stronger load forecasts supported gains in on peak trading. In the south, SoCal Topock was up 16 cents, while further north PG&E Citygate added 6 cents and Malin inflated by 7 cents.

In California, where roughly 40 percent of power plants run on natural gas, the higher gas values meant higher operating costs. Deals at North Path were done at $54.00-$59.25, a gain of $4.40 on average while light load at NP-15 was bought and sold at $25.00-$37.00, up over $12.50. As usual, South Path held the premium for both on peak and off peak (though the premium continues to shrink) with heavy load SP-15 traded almost $4.00 higher at $56.00-$59.00 and light load deals over $10.00 higher at $28.00-$39.00.

Traders in California also noted stronger demand projections for Wednesday with load peaks pegged at 30,691 MW today and 32,267 MW tomorrow, while generation continues to worsen with over 11,000 MW offline as of late Monday. Despite the overall dip in generation, traders did note the restart of the 1,180 MW San Onofre 3 in southern California contributing some pressure to the SP-15 market as the possibility of some more cost-effective nuclear supply for tomorrow delivery helped ease the need for the pricier gas units. The unit was still offline at just 1 percent this morning after shutting in late March.

In the Southwest, the markets were equally as enthused to the upside as mercury readings in Phoenix are called to break into the 100s tomorrow, where they will remain for the rest of this week and likely for the rest of the summer. With cooling demand mounting, the rising natural gas costs were felt that much worse. Palo Verde Hub deals were done at $54.50-$61.75, a gain of over $6.00 on the day while light load PV was purchased at $27.25-$36.75, up closer to $10.00 on the day. Four Corners deals for Wednesday were done at $59.00-$61.50, up $6.50, while off peak deals were $7.25 higher at $28.00-$34.00. As usual Mead held the Southwest premium, but this time held the premium for the whole West Coast as well with on peak deals as high as $63.25 as the point added $7.00 with light load at $34.00-$37.25.

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