Record Gas Demand, Power Alerts Hit California
California seemed as unprepared as ever last week to meet its
energy needs in the face of a blast of cold weather. The power grid
went through an intense struggle to meet heavy winter demand
because a huge amount of generation was off-line due to either
desperately needed maintenance or low water levels behind
hydroelectric dams. But the big surprise was record gas demand for
San Diego Gas & Electric (SDG&E), which was forced to
curtail some interruptible customers.
The prices told much of the story last week. Spot gas prices
rocketed to record heights as strong demand and restricted gas
flows tested the system. On Wednesday, prices reached an average of
$8/MMBtu and highs above $8.50 at the Southern California Border
and PG&E Citygate. But that was just a warm-up for Friday when
prices soared to more than $10.
Power prices bumped up against the bid cap at $249/MWh Wednesday
and Thursday on the California Power Exchange and rose even higher
on the spot market. Meanwhile, gas and electric utilities
throughout the state and the state's electric grid operator issued
a variety of emergency alerts throughout the week.
Combination utility SDG&E revealed Tuesday that it was
forced to curtail gas service to many of its large electric
generation and industrial customers on as temperatures dipped into
the low to mid 40s. "We have very high demand out here," said
SDG&E spokesman Ed Van Herik. "We've had a cold snap here. The
temperatures are very unusual, and we've had a lot of growth in the
region in the last few years. These are interruptible customers
being curtailed in 12 blocks; some customers have been curtailed
entirely and some have had only a portion of their loads
curtailed." He said the customers subject to curtailment were
chosen by a "random computerized process."
"Monday we set a new record for natural gas sendout of 613
MMcf/d," said Herik. "We expect our sendout [Wednesday] to exceed
600 MMcf. The last record was set Jan. 26, 1999 at 577 MMcf."
Another SDG&E spokesman said although demand didn't return to
record levels the rest of the week, it was very high in the morning
Thirty-degree temperatures increased demand significantly in
Northern California, too. System demand soared to 3.76 Bcf/d on
Tuesday, a 500 MMcf/d increase from the previous Friday. As a
result, PG&E was forced to use more than 1 Bcf/d of storage
withdrawals, and call a customer specific operational flow order
the following day. System inventory also dropped below the normal
operating range on Thursday, but no OFO was called.
Southern California Gas also experienced strong demand, but fell
short of record levels, according to a spokeswoman. "We hit 4.5
Bcf/d on Tuesday and our all-time high was 5.3 Bcf/d back in 1990."
Nevertheless, SoCalGas has relied heavily on storage withdrawals to
To complicate matters, upstream gas pipelines have been
conducting maintenance programs that reduced gas flows
significantly last week. Transwestern Pipeline was conducting
maintenance on compressors in the San Juan Basin, reducing gas
flows by as much as 400 MMcf/d at times. Ongoing maintenance on its
mainline West of Thoreau segment already was reducing flows by
about 60 MMcf/d to California.
Maintenance on El Paso Natural Gas' north mainline reduced gas
flows to California by about 250 MMcf/d, and the south mainline has
been limited by about 200 MMcf/d because of the rupture that
occurred on the pipeline in August. The pipeline also had an
unauthorized overpull penalty in effect all week until Wednesday.
The cold weather and pipeline issues, however, still were only
part of the problem. Any gas-fired peaking power available in the
state was running full tilt to compensate for 12,000 MW of
generation being down because of maintenance or forced outages.
"Natural gas usage right now for power generation is twice as much
as on a typical winter day," SDG&E's Herik said on Tuesday.
On Friday morning it appeared likely that the California
Independent System Operator would call an electrical emergency
alert for the fifth day in a row because of the generation outages,
limited power imports and high in-state demand. The ISO issued
stage one and stage two alerts Monday, Tuesday and Wednesday and
had a stage one alert on Thursday. It requested supplemental power
bids for 2,000 and 3,000 MW at several points during the week.
(Stage two alerts are called when power reserves fall below 5%. At
that point certain interruptible customers have their power
"Yes it does sound like a lot [of generation is down] until you
break it down," said CAL-ISO spokesman Patrick Dorinson in an
interview on Wednesday. "About 7,000 MW of that [12,000 MW] is
planned and scheduled outages for maintenance, repair, whatever;
these units worked very hard this summer. Out of that 7,000 MW,
about 1,000 MW is delayed in returning to service for whatever
reason. That brings you down to 6,000 MW and that's very manageable
given the fact that we're in a lower load period."
Out of the remaining 5,000 MW that was not scheduled to be out
of service, roughly 2,000 MW is hydroelectric power that is down
because there is no water behind the dams, he said. The other 3,000
MW is down for "all kinds of problems. These units are old. This is
not exactly the Cadillac of fleets.
"During the summer when we were running 45,000 MW days on
average, we were out probably 2,500 MW a day in forced outages. Add
to that the fact that our normal imports from the Pacific
Northwest, which used to be roughly around 7,000 MW this time of
year, are down to 4,000 to 4,500 MW because they need it; their
dams don't have any water behind them either. You add all that
together and you have a problem."
Potentially adding to the problem going forward, Dorinson said,
is the state of generator emissions credits. Because so many power
plants were running full tilt all summer, many generators are very
low on emissions credits. Some may have to shut down their plants
as a result. "I'm sure everybody is talking to the Air Quality
board, as we are, to try and get some credits extended," he said.
Although there were no major failures during the week, the
situation seemed to worsen on Friday at least in the gas market.
Traders were reporting spot gas deals at more than $12/MMBtu. "This
has been the coldest November in Southern California I've ever
seen," said one marketer on Friday, "our power loads are very