Prices

Volumes and prices of spot electricity bought by California in March increased above the first two months of this year, according to statistics released last week by the state’s power-buying agency, the Department of Water Resources (DWR). For the first two months of the year, the state continued to sell excess power at about half the price it paid for it. No sales statistics were released for March.

One might have thought much of North America was under a blizzard watch, judging from strong post-holiday gains Tuesday in the cash market and an even stronger screen performance. Instead, traders apparently were looking beyond this week’s continuing mundane weather fundamentals to new forecasts of something the market hasn’t seen a whole lot during this heating season: a seriously bad blast of winter next week.

Blame it on Enron Corp.’s collapse or commodity prices that have dropped from the heavens, but whatever the reason, utility executives are rethinking their once lofty notions of the merchant energy side of the business and instead have begun to turn more attention to their core generation businesses — a strategy change that has occurred in just one year.

Blame it on Enron Corp.’s collapse or commodity prices that have dropped from the heavens, but whatever the reason, utility executives are rethinking their once lofty notions of the merchant energy side of the business and instead have begun to turn more attention to their core generation businesses — a strategy change that has occurred in just one year.

While many producers are cutting spending plans this year because of sharply lower domestic oil and gas prices, Marathon Oil Corp. said it would raise its capital investment and exploration spending by 3% to $1.8 billion for 2002 and would double spending on acquisitions.

Last week’s market closed out Friday with a reversal of the previous day’s mild rally in fairly quiet activity. A large majority of the weekend price declines were on either side of a dime, but a few ranged up to about 15 cents. Florida citygates recorded a modest gain of about a nickel.

While not quite the “crash” that some had seen as possible, prices did fall substantially in Friday’s trading for the holiday weekend. Nearly all declines were between about a dime and 20 cents, but a few Northeast citygates took even bigger hits while Florida citygates were flat.

The cash market managed to keep up a mildly firmer facade Thursday, but prospects for a weekend crash are fairly strong, sources said. Yesterday’s quotes ranged from flat to either side of a nickel higher in most cases, with scattered points Transco Zone 6 (both pools), Transco Station 85 and MRT registering small declines.

In what it dubs as a “synthesis” of proven operating steps in both eastern and western markets, California’s non-profit electricity transmission grid operator, Cal-ISO, last Wednesday released its draft 2002 Market Design Plan as a starting point that it plans to refine later this month with input from market participants. The plan’s overall objective for what eventually must be a federally approved blueprint is to shrink the grid operator’s real-time market and provide more future wholesale price stability, according to Cal-ISO’s chief architect for the plan.