Market Update Report

"Energy Market Report" <emr@econ.com< on 10/18/2001 07:16:42 PM

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Subject: Energy Market Report - 10/18/01

Energy Market Report
Thursday, October 18, 2001

*See attached pdf file.
__________________________________________________________
Western Pre-Scheduled Firm Electricity Prices($/MWh)
October 18, 2001 for October 19 and 20, 2001

Peak(Heavy)
Low Change High Change
NW/N. Rockies 23.00 -1.00 25.50 -1.50
Mid-Columbia 23.00 -1.00 25.50 -1.50
COB 25.25 -3.00 27.00 -1.75
N. California 25.50 -2.25 26.75 -3.25
Midway/Sylmar NA NA NA NA
S. California 25.75 -3.25 27.15 -3.60
Mead 25.50 -4.75 26.50 -4.50
Palo Verde 25.50 -2.00 28.00 -3.50
Inland SW 25.50 -2.00 27.75 -3.75
4-Corners 23.00 -5.50 26.00 -5.50
Central Rockies 21.00 -2.50 23.50 -4.00
_________________________________________________________
Off-Peak(Light)
Low Change High Change
NW/N. Rockies 21.50 -0.50 22.25 -1.25
Mid-Columbia 21.50 -0.50 22.25 -1.25
COB 22.00 -1.25 24.00 0.50
N. California 23.00 -2.00 24.50 -2.00
Midway/Sylmar NA NA NA NA
S. California 21.00 -0.25 22.50 -3.50
Mead 20.00 -4.00 22.50 -2.75
Palo Verde 20.50 1.00 22.25 -3.25
Inland SW 20.50 1.00 22.50 -3.00
4-Corners 20.00 -2.00 21.25 -3.75
Central Rockies 13.50 -1.50 18.00 1.00
_________________________________________________________
Wake-up Call

Amid waning weekend demand and sagging spot gas values, Western peak power
prices fell for the Friday/Saturday combo. Several players, however, were
surprised by the relative strength of the weekend package. "We were
expecting more of a downside in the dailies today, but who's complaining,"
said one seller. While spot gas prices were heading lower on Thursday,
NYMEX Henry Hub futures contracts were moving up, albeit slightly. Gas
contracts for the front months rose on some late-session short covering, but
failed to make up for the more substantial losses that occurred on
Wednesday. November Hub gas gained 6.8 cents to settle at 2.486$/mmBtu,
while December rose 9.7 cents to end at 2.8$/mmBtu. On the national front,
a threat against the Three Mile Island nuclear plant served as a wake-up
call about the vulnerability of the nation's energy supplies. Some U.S.
senators have urged that billions of dollars be spent to protect American
oil refineries, natural gas pipelines, hydropower dams, and nuclear power
plants. "The very word 'security' has changed dramatically where it's now
synonymous with anti-terrorism," said one source.

Heavy load energy costs in the Northwest fell by an average of 1.25$/MWh for
the weekend package. Lower demand and weaker spot gas values were the most
oft-cited explanations given for the softer dailies. The spread between
peak and off-peak prices narrowed slightly on Thursday, and was expected to
shrink further, as fish mitigation procedures went into effect Wednesday
night. The Vernita Bar operations, which are scheduled to last until
November 22, effectively reduce generation during the on-peak hours, while
beefing up generation over the off-peak hours. Flow forecasts for Chief
Joseph came in at 60 kcfs Friday, 45 kcfs Saturday, 40 kcfs Sunday, 70 kcfs
Monday, and 65 kcfs next Tuesday through Thursday. Weather forecasts for
the region's major load centers called for normal to slightly below-normal
temperatures into early next week.

California electricity prices for the Friday/Saturday package weakened in a
volatile day of trading on Thursday. Some players were sitting on the
sidelines Thursday, one saying, "I'm not buying in the dailies. I think
real-time prices will be better [less expensive] over the weekend." In
other developments, the federal government reached an agreement with a
coalition of energy companies to build new transmission along Path 15. The
new power lines were projected to cost $300 million and result in relief of
the current price-raising bottleneck during high demand times. The new Path
15 would have a 1500 MW capacity. In political news, California Governor
Davis hopped on the renegotiating-long-term-contracts bandwagon, much to the
relief of his fellow Democrats in the state legislature. Renegotiation is
strongly opposed by the suppliers holding those contracts. In unit news,
Alamitos #3 (320 MW), Encina #5 (332 MW), and Moss Landing #6 (739 MW) were
all back at full power on Thursday. Daytime temperatures stayed in the
comfortable low-70s on Thursday, 5 to 10 degrees warmer across southern
inland regions, and were expected to stay within 2 to 3 degrees of normal
through Monday. The latest six-to-ten called for above-normal temperatures
from October 24 to 28.

Despite some unseasonably warm temperatures, heavy load energy costs in the
Southwest sunk for the Friday/Saturday duo. Falling spot gas prices were
also given some of the credit for the weaker day-ahead market. Peak power
at Palo Verde saw action between 25.5 and 28$/MWh, with the highest prices
heard late in the trading session. In unit news, Four Corners #4 (750 MW)
returned to service following tube leak repairs that began last weekend, but
Arizona-based Coronado #2 (385 MW) was brought down for valve replacement
scheduled to last until Monday, October 22. Weather forecasts called for
cooling on Sunday and Monday, but the latest six-to-ten from the NWS was
predicting a return to above-normal temperatures from October 24 through 28.

Patrick O'Neill and Jessie Norris
_________________________________________________________

Western Generating Unit Outages

Current Begins Ends Reason
CAISO units <250/5429 total NA NA
planned/unplanned*
Bridger #4/520/coal 17-Oct-01 20-Oct-01 repairs
Comanche #2/335/coal 29-Sep-01 30-Oct-01 maintenance
Contra Costa #7/337/gas 01-Sep-01 ? planned
Coronado #2/385/coal 18-Oct-01 22-Oct-01
maintenance*
Crockett Cogen/260/gas 15-Oct-01 ? planned
El Segundo #3/337/gas 02-Oct-01 ? unplanned
Etiwanda #3/320/gas 05-Oct-01 ? unplanned
Etiwanda #4/320/gas 05-Oct-01 ? unplanned
Helms PGP #2/407/hydro 01-Oct-01 ? planned
Hyatt/Thermalito/900/hydro 02-Oct-01 ? @ 250MW,
planned
Los Medanos/550/gas 17-Oct-01 ? @ 125MW,
planned
Ormond Beach #2/750/gas 05-Oct-01 ? unplanned
Palo Verde #2/1270/nuke 10-Oct-01 30 days maintenance
Palo Verde #3/1270/nuke 29-Sep-01 03-Nov-01
refuel/maint.
Rawhide/255/coal 18-Oct-01 20-Oct-01 tube leak*
San Onofre #2/1070/nuke 14-Oct-01 02-Nov-01 maintenance
Sunrise Power Plant/338/gas 17-Oct-01 ? planned

Future
San Juan #4/534/coal 20-Oct-01 11-Nov-01 maintenance

For unit owners refer to pdf version.
*Indicates a change from previous EMR.
______________________________________________________________________

Eastern Markets Pre-Scheduled Firm Power Prices ($/MWh)

October 18, 2001 for October 19, 2001

Peak (Heavy) in $/MWh
Low Change High Change
Into Cinergy 21.75 0.25 24.00 0.65
Western PJM 25.25 -0.75 25.50 -1.50
Into Entergy 20.00 -0.50 21.00 -0.45
Into TVA 22.00 0.50 23.00 -1.25
___________________________________________________________
Spot power prices across the Eastern Interconnect mostly weakened in
Thursday trade, as expectations for warmer weather on Friday and into the
weekend took their toll on demand. While Thursday remained cool, with
daytime temperatures 5 to 11 degrees below normal, Friday temperatures were
expected in the 60s and 70s across most of the regions. Overnight lows were
expected to climb out of heating demand range by Saturday. In more somber
news, Pennsylvania's Three Mile Island #1 (786 MW) heightened its already
stringent security measures in cooperation with state and federal
authorities, after a threat to the nuclear unit was received on Wednesday.
However, by Thursday the threat was deemed non-credible, and refueling
maintenance was allowed to continue. NYMEX Henry Hub futures edged up on
Thursday, but reclaimed only a fraction of Wednesday's losses. November
gained 6.8 cents to close at 2.486$/mmBtu, and December rose 9.7 cents to
end at 2.80$/mmBtu.

In the Mid-Atlantic, heavy load energy costs fell on Thursday, as off-line
generation declined for the third day in a row and weather forecasts for
Friday called for warming. Western PJM goods were trading in a narrow range
from 25.25 to 25.5$/MWh, losing 1.5$/MWh off the high end, and 0.75$/MWh off
the low. LMPs affected daily prices less on Thursday, fluctuating between
20 and 30$/MWh after the usual early morning spike. Weather was cool, with
daytime highs only in the low-60s and overnight lows in the low-40s.
Temperatures were predicted to increase, reaching above-normal ranges for
the weekend and Monday. The latest six-to-ten from the NWS called for
below-normal temperatures for October 24 to 28. On the unit front, there
were no new nuclear plants off-line, allowing Western PJM room to export
some surplus generation.

Peak power prices in the Midwest remained steady for most of the day, as
temperatures were expected to warm up through the weekend. Into Cinergy
pieces traded in the range from 21.75 to 24$/MWh, climbing slightly to a day
ago. The bulk of deals were completed between 22 and 22.5$/MWh, with the
24$/MWh seen very late in the trading session. Loads were light on
Thursday, and expected to stay that way, with temperatures across the
regions warming over the weekend. Above-normal temperatures were expected
by Sunday, continuing into Monday with daytime highs in the low-70s. The
latest six-to-ten called for below-normal temperatures for October 24 to 28.
Generation remained very healthy across ECAR on Thursday, but fall refueling
outages at Surry #1 (781 MW) and Fermi #2 (1,085 MW) were expected in the
near future.

Peak power prices in SERC lost ground on Thursday, as weather was expected
to warm back up for the weekend. Daytime high temperatures in the
low-to-mid 60s were seen across most of the region, about 10 degrees below
normal, and expected to warm into the mid-to-upper 70s by Saturday. The
most current six-to-ten predicted normal temperatures from October 24 to 28.
Into Entergy prices held steady, with goods changing hands from 20 to
21$/MWh, and the bulk of trades in the 20.25 to 20.50$/MWh range. Into TVA
transacted between 22 and 23$/MWh. No new information was available on
outages in the region.
___________________________________________________________
California ISO Congestion Index in $/MWh

Path Peak Off-peak
for 19-Oct-01 NW1 to NP15 0.00 0.00
NW3 to SP15 0.00 0.00
AZ3 to SP15 0.00 0.00
LC1 to SP15 0.00 0.00
SP15 to NP15 0.00 0.00

OTC Forward Peak Electricity Contracts in $/MWh

Mid-C PV SP-15
Bid Ask Bid Ask Bid Ask
BOM 25.75 26.25 27.25 27.75 27.50 28.00
November 28.00 28.50 27.25 27.75 28.50 29.00
December 36.00 36.50 31.50 32.25 33.50 34.50
Q1 '02 33.25 34.00 31.75 32.00 33.25 33.75
Q2 '02 27.50 28.50 35.00 36.00 34.00 34.50
Q3 '02 44.00 45.00 52.00 52.75 48.25 49.00
Q4 '02 36.75 37.50 36.00 36.50 37.00 37.25
Cal '03 38.00 39.00 40.50 41.50 43.00 43.50

Represents the most recent bid/ask spread obtainable
by the Energy Market Report.

Alberta Power Pool Index (C$/MWh)

Peak(14) Peak(16) Off-Peak Flat Change
for 17-Oct-01 68.72 65.20 30.87 54.83 3.93

BPA's Offer in $/MWh

Hours Amount NW COB NOB

BPA has no offer until further notice.

NYMEX Henry Hub Gas Futures in $/mmBtu

Close Change
Nov 2.486 0.068
Dec 2.800 0.097

Natural Gas Spot Prices in $/mmBtu

Low High
Sumas 2.06 2.11
So. Cal Border 2.27 2.32
San Juan 2.02 2.07
__________________________________________________________

Economic Insight, Inc. - 3004 SW First, Portland, Oregon 97201,
Telephone (503) 222-2425, Internet e-mail emr@econ.com -
Copyright, Economic Insight, Inc. 2001.

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