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CA Heat, Nuke Outages Spark Heavy Demand

CA Heat, Nuke Outages Spark Heavy Demand

Gas prices shot to $5/MMBtu last Monday at the Southern California border and PG&E Citygate, and hourly intra-day peaking prices on the California Power Exchange spiked to $863/MWh. Day-ahead peaking power prices got as high as $470.

In the midst of a Stage Two emergency power alert by the state grid operator, California generating plants used every cubic foot of natural gas they could squeeze through the state's pipeline system to keep the air conditioners humming in response to a statewide heat wave.

The second stage alert, enacted less than two hours after a Stage One had been called, required utilities to seek voluntary curtailments. A combination of planned and unplanned maintenance on electric generation units, low hydroelectric power availability and constraints on parts of the natural gas interstate delivery system from the Southwest caused gas demand and prices to skyrocket, according to sources among the electrical and gas utilities in the state.

"I've got a lot of power plants to feed, and it's really hot!" said one gas marketer. He blamed a "stupid SoCal Gas OFO" for causing Monday's spot gas price spike. The OFO caused everyone to get behind on supplies over the weekend, he said, "and now we're having to make up for lost time." Another source, noting that PG&E had a customer-specific OFO in effect Sunday, commented, "I can guarantee you that [high-inventory situation] is gone now. We might even head to a low-inventory OFO by Thursday."

Electrical demand did not quite reach the 40,500 MW level forecast by the California Independent System Operator (Cal-ISO) before it instituted its Stage One and Two alerts in the early afternoon. Power demand peaked at 39,774 MW, far shy of the state record set last year (45,884MW) but that was mid-summer. Furthermore, this demand peak was more troublesome because of the extent of major generating units out of service.

The Cal-ISO issues the second stage alert when operating reserves dip below the 5% level or are expected to within a two-hour period. Prices are capped at $750/MW, and for several hours Monday those caps were reached for ancillary services. (The Cal-ISO is restricted from accepting bids over the cap, so if there was a buyer of $863/MWh power it would have to be outside the ISO, a Cal-PX spokesperson said.)

"Things are tighter than they normally would be on a hot day like today," said a Southern California Edison spokesperson Monday, noting that Edison peaked at 16,000 MW, still more than 2,000 MW below its all-time high set last year. "We're not going to break any records today. What makes it tight are the planned and unplanned outages of units. That's what is keeping everyone on their toes."

Pacific Gas and Electric, which like Edison and the state's other major investor-owned electric utility, San Diego Gas and Electric, no longer operates gas-fired generation plants in California, indicated that its peak electric demand Monday was in the 20-21,000 MW range, well below last year's record of more than 23,000 MW.

The Los Angeles Department of Water and Power (LADWP) was running all of its gas-fired generation units all out, consuming upward of 300 MMcf/d. LADWP's gas procurement manager reported prices over the $4/Mcf level for gas supplies.

"It could get as high as $5 later on in a couple of months," the manager indicated. "We're not sure what the problem is. Some of it we think has to do with El Paso Merchant holding all of that capacity (1.3 Bcf) and withholding some of it so there is a constraint on the transmission system rather than just a problem with availability of gas.

LADWP has had peak gas usage of up to 500 MMcf/d for a single day, but its peak period average is in the 300 MMcf/d range. Last October, which was hot in southern California, the city utility consumed 9 Bcf, according to the procurement manager.

Southern California Gas was keeping specific throughput figures confidential. "Sendout is up as one would expect on a hot day like today, but we see no problem in meeting demand," a SoCalGas spokesman said. PG&E's San Francisco-based spokesperson said Monday's load for electric generation was 1.1 Bcf in an overall sendout of 2.7 Bcf.

Richard Nemec, Los Angeles

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