FW: Energy Market Report

Energy Market Report
Friday, January 4, 2002

*See attached pdf file.
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Western Pre-Scheduled Firm Electricity Prices($/MWh)
January 4, 2002 for January 6, 2002

Peak(Heavy)
Low Change** High Change**
NW/N. Rockies* 15.75 NA 17.50 NA
Mid-Columbia* 15.75 NA 17.50 NA
COB* 16.00 NA 17.25 NA
N. California* 17.25 NA 19.00 NA
Midway/Sylmar* NA NA NA NA
S. California* 17.25 NA 19.00 NA
Mead* 18.00 NA 20.00 NA
Palo Verde* 15.50 NA 18.50 NA
Inland SW* 15.50 NA 20.00 NA
4-Corners* 16.50 NA 18.00 NA
Central Rockies* 18.00 NA 20.00 NA
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Off-Peak(Light)
Low Change** High Change**
NW/N. Rockies* 15.75 NA 17.50 NA
Mid-Columbia* 15.75 NA 17.50 NA
COB* 16.00 NA 17.25 NA
N. California* 17.25 NA 19.00 NA
Midway/Sylmar* NA NA NA NA
S. California* 17.25 NA 19.00 NA
Mead* 18.00 NA 20.00 NA
Palo Verde* 15.50 NA 18.50 NA
Inland SW* 15.50 NA 20.00 NA
4-Corners* 16.50 NA 18.00 NA
Central Rockies* 18.00 NA 20.00 NA

*Denotes trading of flat, 24-hour products.
**"NA" changes are not applicable because prices for on and off peak goods
are not comparable to flat products.
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Western Pre-Scheduled Firm Electricity Prices($/MWh)
January 4, 2002 for January 7, 2002

Peak(Heavy)
Low Change** High Change**
NW/N. Rockies 17.75 NA 20.00 NA
Mid-Columbia 17.75 NA 20.00 NA
COB 18.75 NA 21.25 NA
N. California 22.50 NA 25.00 NA
Midway/Sylmar NA NA NA NA
S. California 22.00 NA 24.75 NA
Mead 22.50 NA 25.00 NA
Palo Verde 21.00 NA 25.00 NA
Inland SW 21.00 NA 25.00 NA
4-Corners 20.00 NA 23.75 NA
Central Rockies 21.50 NA 26.00 NA

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Off-Peak(Light)
Low Change** High Change**
NW/N. Rockies 15.75 NA 17.50 NA
Mid-Columbia 15.75 NA 17.50 NA
COB 16.00 NA 17.25 NA
N. California 17.25 NA 19.00 NA
Midway/Sylmar NA NA NA NA
S. California 17.25 NA 19.00 NA
Mead 18.00 NA 20.00 NA
Palo Verde 15.50 NA 18.50 NA
Inland SW 15.50 NA 20.00 NA
4-Corners 16.50 NA 18.00 NA
Central Rockies 18.00 NA 20.00 NA

**"NA" changes are not applicable because prices for on and off peak goods
are not comparable to flat products.
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Bear Sighting in the West

Despite the uncertainty that goes hand in hand with scheduling three days
out, Western peak power prices for Monday delivery were mostly lower on
Friday amid a plethora of bearish fundamentals. Waning weather-related
demand, lower spot gas prices and ample hydroelectric generation were some
of the forces placing downward pressure on the daily electricity market. "I
can't believe how low prices are right now, so low in fact that they are
below the cost of our gas-fired generation," said one frustrated would-be
seller. The weather outlook offered little hope for strength in the near
term, with heating demand in the WSCC expected to average a mere 68 percent
of normal through January 11. Light load goods did manage to gain a little
strength at some of the Western hubs, mainly on the inclusion of the all-day
Sunday piece. NYMEX Henry Hub contracts for February and March were almost
unchanged from the previous day, both gaining less than one cent on Friday.
"Given the current weather outlook, we could see some more downside for
Henry Hub contracts on Monday," warned one gas watcher.

Monday's heavy load energy costs in the Northwest were mostly flat to lower
on Friday as mild weather forecasts and abundant hydropower continued to
depress the market. Peak power at the Mid-Columbia traded from 17.75 to
20$/MWh, with the bulk of transactions occurring around the 18.75$/MWh mark.
Balance-of-January contracts trading in the 20.25 to 20.75$/MW range was a
good indicator that most players were not expecting any significant rise in
prices through the month. Light load goods fell by as much as 1.25$/MWh,
with confirmed trades taking place anywhere between 15.75 and 17.5$/MWh.
"There's just nothing out there that could bring the dailies up, the weather
is just too mild and hydro too plentiful," said one Washington-based trader.
Flow forecasts for Chief Joseph were little changed Friday, coming in at 75
kcfs Saturday, 60 kcfs Sunday, 110 kcfs Monday, 105 kcfs Tuesday through
Thursday, and 100 kcfs on Friday.

Power prices for the Sunday/Monday package in the Golden State followed the
rest of the Western electricity market down on Friday. "The California snow
pack is around 160%, gas storage is high, prompt-month gas is down, forwards
are off, precipitation is plentiful, and to top it all off the weather is
mild. Basically every fundamental I can think of is bearish," said one
northern trader of the dailies' plunge. "With gas storage so high, it will
take a longer cold snap than usual to generate an upside in this market,"
said another, adding that the extended forecast didn't call for a possible
change in the weather until January 17. Electricity at NP15 and SP15 traded
almost flat to one another. NP15 peak goods changed hands between 22.5 and
25$/MWh, while the off-peak product saw action from 17.25 to 19$/MWh. On
the generation front, Los Medanos (550 MW) was operating at 530 MW on
Friday. Fellow gas-fired generators Morro Bay #3 (337 MW) and Alamitos #4
(320 MW) were out of service for planned maintenance. High temperatures for
the early part of the new week were expected in the mid-50s at mid-state
load centers, and in the upper-60s in southern regions. Overnight lows were
anticipated to be about 13 to 16 degrees below the highs. The latest
six-to-ten called for above-normal temperatures from January 10 to 14.

Not even news of new unit outages was enough to perk up spot prices in the
Southwest on Friday, though the all-day Sunday/off-peak Monday package did
see a smidgeon of strength. Peak power at Palo Verde ranged from 21 to
25$/MWh, with most trades taking place from 22.5 to 23$/MWh. In unit news,
it was confirmed that San Juan #1 (350 MW) was brought down on Tuesday for
tube leak repairs. Sources said that the unit was due back "any minute
now," but it had yet to be revived as of this writing. Four Corners #4 and
#5 (750 MW each) tripped Friday due to "instrument error," and were given an
ETR of sometime on Sunday. Mohave #2 (790 MW) was expected to attempt a
return Friday night, but players with a share of the unit indicated that it
had not been scheduled in place for Sunday or Monday. "Those units [Mohave]
are so unreliable on startup, that they've got to be up and running for 24
hours before you can say that they're really back," joked one marketer.
Looking ahead, Palo Verde #2 (1,270 MW) was scheduled to enter a 30-day
spring maintenance outage on March 16. Weather forecasts for the Phoenix
area called for warming through Tuesday, while the latest six-to-ten from
the NWS called for mostly above-normal temperatures in Arizona and normal
conditions in New Mexico from January 10 through 14.

Patrick O'Neill and Jessie Norris
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Western Generating Unit Outages

Current Begins Ends Reason
CAISO units <250/6254 total NA NA
planned/unplanned*
Alamitos #3/320/gas 04-Dec-01 ? planned
Alamitos #4/320/gas 04-Jan-02 ? planned*
Big Creek Project/1020/hydro 09-Dec-01 ? @752MW,
planned
Cholla #4/375/coal 01-Jan-02 ? unplanned
Coronado #1/365/coal 22-Dec-01 08-Jan-02 main
transformer
Etiwanda #3/320/gas 22-Dec-01 ? planned
Etiwanda #4/320/gas 22-Dec-01 ? planned
Four Corners #4/750/coal 04-Jan-02 06-Jan-02 unplanned*
Four Corners #5/750/coal 04-Jan-02 06-Jan-02 unplanned*
Grand Coulee #19/600/hydro 10-Dec-01 March repairs
Helms PGP #2/407/hydro 01-Oct-01 ? planned
Hyatt/Thermalito/933/hydro 02-Oct-01 ? @607 MW,
unplanned
Mohave #2/790/coal 29-Dec-01 06-Jan-02 unplanned
Morro Bay #3/337/gas 04-Jan-02 ? planned*
Moss Landing #7/739 29-Dec-01 ? planned
Ormond Beach #1/725/gas 28-Dec-01 ? planned
Ormond Beach #2/750/gas 05-Oct-01 ? @350 MW,
unplanned
Pittsburg #6/317/gas 22-Nov-01 ? planned
Pittsburg #7/682/gas 03-Jan-02 ? unplanned
Redondo #8/480/gas 09-Dec-01 ? planned
San Juan #1/350/coal 01-Jan-02 05-Jan-02 tube leak*

For unit owners refer to pdf version.
*Indicates a change from previous EMR.
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Eastern Markets Pre-Scheduled Firm Power Prices ($/MWh)

January 4, 2002 for January 7, 2002

Peak (Heavy) in $/MWh
Low Change High Change
Into Cinergy 19.00 -6.00 26.00 -3.50
Western PJM 26.25 -0.70 26.75 -1.50
Into Entergy 17.00 -7.50 22.50 -5.75
Into TVA 21.50 -4.50 25.50 -5.25
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Amid forecasts calling for milder temperatures in the new week and a
volatile gas market, heavy load electricity prices for Monday delivery
traded much lower across the Eastern Interconnect on Friday. The Southeast
lost the most ground, with prices falling throughout the day. NYMEX Henry
Hub natural gas futures were flat to Thursday's bearish levels, with the
front-month closing up less than a cent at 2.275$/mmBtu. March picked up
just 0.2 cent to end at 2.265$/mmBtu.

Amid significantly fewer electricity imports, a stronger real-time price for
most of the morning, and rumors of a base-load nuclear unit still off-line,
peak power prices only shed a relatively benign 2$/MWh. Western PJM goods
changed hands between 26.25 and 26.75$/MWh, with the high end bid up very
late in the day. The bulk of deals were done between 26.35 and 26.4$/MWh.
Some traders thought Salem #2 (1,106 MW) was still down, or tripped in the
early morning after coming back briefly Thursday, but no one was entirely
certain which units were off Friday. LMPs bounced between 25 and 31$/MWh
for most of the morning, and averaged 24.79$/MWh through 15:00 EST. Monday
forecasts called for low temperatures in the 34 to 35 degree range, firmly
above freezing, while highs were expected to stay in the 37 to 41 degree
range. The latest six-to-ten predicted mostly above-normal temperatures
from January 10 to 14.

With weather conditions expected to warm up in the new week, peak power
prices slipped in the Midwest on Friday in active trade. Into Cinergy
pieces were bought and sold between 19 and 26$/MWh. In unit news, Illinois
nuke LaSalle (1,144 MW) powered down to 90% capacity on Friday, on its way
to a mid-month refueling outage. High temperatures were expected just above
freezing on Monday, with overnight lows in the mid-20s. The most current
six-to-ten from the NWS called for mostly above-normal temperatures from
January 10 to 14.

Rising gas concerns spelled falling electricity prices in the Southeast on
Friday. "The market was pushed down all day, but fell very fast at the end
when lots of people were trying to sell based on rumors that gas prices were
going to come off even more. They really got burned by their positions,"
commented one trader on the tanking Southeastern spot market. Into Entergy
prices were seen from 22.5$/MWh out-of-the-gate down to 17$/MWh.
Balance-of-the-month also weakened on Friday, trading between 20 and
21$/MWh, falling over a dollar to a day ago, mainly on the mild weather
outlook. Into TVA deals were heard between 21.5 and 25.5$/MWh, trailing
down more than 5$/MWh on both ends. According to sources, maintenance at
one of TVA's coal-fired Paradise units (704, 704, and 1,150 MW) was
reportedly at least a week behind schedule. Weather conditions were
expected to warm up in the early part of the new week, giving thin-blooded
Southerners some relief from the snow and cold that saddled the region this
week. The latest six-to-ten called for mostly below-normal temperatures
from January 10 to 14.
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California ISO Congestion Index in $/MWh

Path Peak Off-peak
for 05-Jan-02 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 20.00 21.00 23.50 24.50 24.00 25.00
February 19.00 20.50 23.00 24.00 24.00 25.00
March 16.50 18.00 23.00 24.00 23.75 24.75
April 16.50 18.00 23.50 24.50 22.50 23.50
Q2 '02 16.50 18.00 26.00 27.00 26.25 27.25
Q3 '02 29.75 31.25 39.75 40.75 39.00 40.00
Q4 '02 25.00 26.50 26.00 27.00 28.00 29.00
Q1 '03 25.75 27.25 25.50 26.50 28.00 29.00
Cal '03 25.75 27.25 31.50 32.50 33.00 34.00

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 03-Jan-02 38.00 37.00 25.54 33.49 -3.82

BPA's Offer for 01/08/02.

Hours Amount NW delivered COB/NOB delivered

1-6,23,24 100MW Market Price* Market Price*
7-22 100MW Market Price* Market Price*

*Market price will be determined at time of request.

NYMEX Henry Hub Gas Futures in $/mmBtu

Close Change
Feb 2.275 0.007
Mar 2.265 0.002

Natural Gas Spot Prices in $/mmBtu

Low High
Sumas 1.96 2.01
So. Cal Border 2.20 2.25
San Juan 2.01 2.06
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Economic Insight, Inc. - 3004 SW First, Portland, Oregon 97201,
Telephone (503) 222-2425, Internet e-mail emr@econ.com -
Copyright, Economic Insight, Inc. 2002.