Blackout

Consolidated Edison Co. (Con Ed) said a relay protection system at its West 65th Street substation failed over the weekend, causing a blackout that affected more than 70,000 customers on the West Side of Manhattan.

Despite the lack of supportive fundamentals and an electronic Globex trading blackout of just over an hour, traders pushed June natural gas futures convincingly higher on Friday to close at $3.546, up 17.3 cents from Thursday and 14.4 cents above the previous week’s close.

Hurricane Ike caused the largest blackout in Texas history when it roared ashore at Galveston Sept. 14, and it went on to knock out power to millions from the Gulf Coast to the Great Lakes. Nearly two million customers, most in the Houston and Galveston area, remained powerless on Friday, and the utilities serving the region warned that some customers could be without electricity into October.

Gas pipeline companies reported no significant impact on gas transportation operations from the blackouts in the Northeast, Great Lakes and eastern Canada. However, some did note that there were sharp and sudden demand reductions because many gas-fired power plants, chemical companies and industrial manufacturing plants were shut down. As a result, even more gas was expected to be headed into storage.

Under the fresh new provisions for two- and one-day advance notices of potential rolling blackouts, California’s transmission grid operator, Cal-ISO, issued warnings Monday for later this week of potential rolling blackouts. None were needed Monday as temperatures in the inland valleys soared statewide, driving peak demand to 37,200 MW, about 1,000 MW higher than forecast. The warnings automatically terminated, however, when no follow-up 24-hour notice was issued.

As if any more fallout from California’s electricity crisiscould be found, a Colorado-based survey/consulting firm Tuesdayreleased summaries of a national client-supported study thatindicates large energy-using businesses are going to be willing topay more to prevent being shut down from electricity outages; andthe costs of those outages is skyrocketing.

“The market is tanking. That pretty well sums it all up in anutshell,” was how a Gulf Coast marketer characterized the pricesituation Wednesday. Only California, where a series of rollingblackouts began in the northern part of the state (see related story), failed to participate infurther price declines that were mostly between about a quarter and 50cents.