FW: Energy Market Report

Energy Market Report
Monday, January 14, 2002

*See attached pdf file.
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Western Pre-Scheduled Firm Electricity Prices($/MWh)
January 14, 2002 for January 15, 2002

Peak(Heavy)
Low Change High Change
NW/N. Rockies 18.75 0.25 21.25 2.00
Mid-Columbia 18.75 0.25 21.25 2.00
COB 21.50 2.00 23.00 1.50
N. California 22.50 1.50 25.50 3.00
Midway/Sylmar NA NA NA NA
S. California 23.00 1.50 26.25 3.25
Mead 22.75 1.75 25.75 4.00
Palo Verde 22.00 1.75 26.00 3.75
Inland SW 22.00 1.75 26.00 3.75
4-Corners 22.50 2.00 23.50 2.50
Central Rockies 17.75 -1.00 22.00 1.00
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Off-Peak(Light)
Low Change High Change
NW/N. Rockies 16.50 0.50 17.25 0.00
Mid-Columbia 16.50 0.50 17.25 0.00
COB 16.50 1.50 19.00 1.25
N. California 17.00 2.00 19.00 1.00
Midway/Sylmar NA NA NA NA
S. California 16.75 2.25 18.75 -0.75
Mead 17.00 0.50 18.25 0.25
Palo Verde 16.00 1.00 18.00 -0.25
Inland SW 16.00 1.00 18.25 0.00
4-Corners 16.00 1.00 17.00 0.50
Central Rockies 13.00 0.25 15.00 0.50
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Hungry for Heat

Heavy load energy costs in the West received a boost on Monday, compliments
of forecasts calling for below-normal temperatures, increased generation
curtailments, and slightly higher natural gas prices. The long-awaited
colder weather was likely to strengthen spot electricity prices over the
coming days, but opinions varied as to the extent and duration of the
forecasted cooling. "The cold is finally coming here, and temperatures
should remain below normal for at least a week," said one Northwest trader,
who added, "I'm sure the dailies will react to this bullish weather pattern,
but there's so much gas in storage and water in the rivers that prices may
not rise as much as some people are anticipating." NYMEX Henry Hub futures
contracts rose Monday amid reported short covering, but the gains were said
to be limited by moderate weather forecasts for the eastern U.S., and
continued concerns surrounding high gas storage levels. February Hub gas
rose 4.6 cents to close at 2.25$/mmBtu, while March gained 3.7 cents to
settle at 2.24$/mmBtu. In other industry news, attorneys for bankrupt Enron
Corp. said Monday they were delaying the release of details about Enron's
trading unit sale to the Swiss financial institution UBS Warburg until 23:00
EST Monday. Enron and its attorneys would not comment on the reason for the
delay. Patience is a virtue?isn't it?

Peak power prices in the Northwest were on the rise for Tuesday delivery, a
trend many players believed would continue through much of the week. A
round of colder weather was expected to increase heating demand in the
region over the next several days. According to Weather Derivatives,
heating demand in the region was expected to average 110 percent of normal
through January 21, while the most recent six-to-ten-day forecast from the
National Weather Service was predicting that below-normal temperatures would
continue blanketing the Northwest through January 24. Healthy flows at
regional hydro generating units, however, had some parties convinced that
the cold would come and go without incident, and that the upside for daily
prices would therefore be limited. Flows for Chief Joseph on the Columbia
River came in at 95 kcfs through Thursday, 90 kcfs Friday, 60 kcfs Saturday,
50 kcfs Sunday, and 100 kcfs next Monday. In unit news, Bridger #3 (520 MW)
was reportedly still off line Monday for tube leak repairs, though sources
were expecting the Wyoming-based unit to return later Monday evening.
Wyoming-based Naughton #3 (330 MW) came down Sunday for tube leak repairs
expected to last from 48 to 72 hours.

With temperatures slated to remain near to slightly above normal through
Friday, day-ahead peak power in the Golden State firmed up for Tuesday
delivery. Marketers cited an increase in off-line generation as the primary
factor in the price increase. Peak goods at SP-15 were the premium fare on
Monday, with pieces changing hands between 23 and 26.25$/MWh. The latest
six-to-ten called for temperatures to hover around normal from January 20 to
24. In the news, the California Chamber of Commerce and the California
Business Roundtable proposed eliminating the Consumer Power and Conservation
Financing Authority and the Electricity Oversight Board, and to consolidate
the duties of the Public Utilities Commission, the Energy Commission, the
Department of Conservation, and the energy division of the California
Department of Water Resources. Chamber of Commerce President Allan
Zaremberg cited the many overlapping duties of these government entities as
creating competition and conflicts of interest, with the end result of
inflating the state's electricity costs, while two of the entities are of
dubious worth anyhow. The newly-formed Consumer Power and Conservation
Financing Authority has not done anything besides drain state resources
since its inception in August, and the Electricity Oversight Board has
shrunk to a single board member in the absence of its primary duty - to
oversee the now-defunct California Power Exchange. Legislators vowed to
untangle the web of conflict, redundancy, and inefficiency carefully, to
avoid causing an even bigger mess than the one they aim to repair.
Generation had a turbulent weekend, with small-unit outages climbing by
almost 1,700 MW since Friday, and Encina #4 (303 MW) joining sister unit
Encina #5 (332 MW) in off-line status.

As temperatures in the Southwest were poised to dip through the week, spot
electricity prices reacted in kind, gaining as much as 4$/MWh for Tuesday
delivery. Slightly higher natural gas prices were also said to be adding
strength to the dailies. Peak power at Palo Verde ranged from 22 to
26$/MWh, with the bulk of transactions seen between 23.75 and 24$/MWh.
Weather Derivatives projected that heating demand in the desert region would
average 112 percent of normal through January 21, peaking out at 123 percent
of normal on January 18. The latest six-to-ten from the NWS was also
calling for below-normal temperatures across the Southwest through January
24. "Our daytime highs are expected to fall into the mid 60s, and our
overnight lows into the mid 40s. I know that doesn't sound all that cold,
but thin-blooded Southwesterners will undoubtedly be turning on the heat,"
said one Phoenix-based trader. In unit news, Coronado #1 (365 MW) ramped up
to two thirds capacity over the weekend, and was scheduled to hit full power
sometime on Tuesday.

Patrick O'Neill and David Ramberg
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Western Generating Unit Outages

Current Begins Ends Reason
CAISO units <250/7801 total NA NA
planned/unplanned*
Alamitos #3/320/gas 04-Dec-01 ? planned
Alamitos #4/320/gas 04-Jan-02 ? planned
Bridger #3/520/coal 12-Jan-02 14-Jan-02 tube leak
Colstrip #3/700/coal 11-Jan-02 ? repairs
Encina #4/303/gas 12-Jan-02 ? unplanned*
Encina #5/332/gas 11-Jan-02 ? planned
Etiwanda #3/320/gas 22-Dec-01 ? planned
Four Corners #5 09-Jan-02 14-Mar-02 maintenance
Grand Coulee #19/600/hydro 10-Dec-01 March repairs
Haynes #6/341/gas 07-Jan-02 ? planned
Helms PGP #2/407/hydro 01-Oct-01 ? planned
Hyatt/Thermalito/933/hydro 02-Oct-01 ? @506 MW,
unplanned*
Morro Bay #3/337/gas 04-Jan-02 ? planned
Moss Landing #6/739/gas 11-Jan-02 ? unplanned
Moss Landing #7/739/gas 29-Dec-01 ? planned
Naughton #3/330/gas 13-Jan-02 16-Jan-02 tube leak*
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
Redondo #8/480/gas 09-Dec-01 ? planned
San Juan #4/534/coal 10-Jan-02 14-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 14, 2002 for January 15, 2002

Peak (Heavy) in $/MWh
Low Change High Change
Into Cinergy 16.00 -0.50 18.50 0.345
Western PJM 22.00 -2.55 23.65 -1.45
Into Entergy 18.00 0.60 22.50 3.50
Into TVA 18.00 0.00 21.50 2.50
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Day-ahead peak power turned in mixed results on Monday across the Eastern
Interconnect, with northern hubs showing slight price decreases and southern
hubs strengthening in the face of covert unit outages. In the north,
temperatures as much as 15 degrees above normal sucked the life out of the
market, while southern hubs, despite above-normal temperatures, surged
upward amid what some marketers assumed were unreported unit outages. NYMEX
gas futures gained some ground Monday on short covering, but mild weather
and massive inventory levels limited the upside. The February Henry Hub
contract gained 4.6 cents to close at 2.25$/mmBtu, while March rose 3.7
cents to settle at 2.24$/mmBtu.

Peak power prices for Tuesday delivery at Western PJM changed hands from 22
to 23.65$/MWh, losing ground from Friday's 24.55 to 25.1$/MWh trades.
Marketers blamed forecasts calling for temperatures as high as 12 degrees
above normal at least through Friday, with rain showers likely Monday and
Tuesday. The latest six-to-ten likewise forecasted temperatures to remain
firmly entrenched in above-normal territory from January 20 through 24. Many
described Monday's market environment as a "state of confusion, with a lack
of clear direction and thin, illiquid trading" among players. Just before
06:30 on Monday, LMPs spiked to 46$/MWh, and rose again right before 07:00
to just under 40$/MWh, but during peak hours prices did not reach more than
about 32$/MWh. The average for LMPs on Monday was 22.51$/MWh through 14:00.
In unit news, nuclear unit Salem (1105 MW) was reportedly off-line Monday
for undisclosed reasons, with an ETR of Tuesday, January 15.

Into Cinergy day-ahead prices were mostly flat to Friday's peak power
prices, with goods for Tuesday delivery changing hands from 16 to 18.5$/MWh.
This represented a loss of 50 cents on the low end and a gain of 35 cents on
the high. Temperatures remained unseasonably warm on Monday, with the
five-day forecast calling for temperatures to swing from up to 8 degrees
above normal on Tuesday to 3 degrees below normal on Thursday. "There's
still hope that the week could see some strength," dreamed one player in
reference to the favorable forecast. The latest six-to-ten called for a
return to normalcy from January 20 through 24. There were no new unit
outages to report in ECAR on Monday, but it was reported that Palisades #1
(789 MW) could join the grid again as soon as January 18.

The blast of cold air that brushed across the Midwest last week was
breathing its last icy breaths in the Southeast on Monday, with temperatures
predicted to pick up and remain above normal through Friday. Into Entergy
goods traded at a 0.6 to 3.5$/MWh premium from Friday's trades, with peak
power for Tuesday delivery changing hands from 18 to 22.5$/MWh. Some
marketers insisted that weather had nothing to do with it. "Obviously,
there are some units off, or prices wouldn't have come up like they did,"
commented one contented seller, "it's just that nobody's going to know which
ones for a couple of days." The latest six-to-ten predicted Southeastern
temperatures would remain firmly above normal from January 20 to 24. Peak
power prices for Tuesday delivery at Into TVA also gained ground from prices
seen on Friday, with pieces changing hands from 18.25 to 21.5$/MWh on
Monday. "Prices started out at the low end, but I think some buyers got
caught, and didn't mind paying a little more to cover themselves, so prices
came up over the session," ventured one savvy trader. There were no new
unit outages or curtailments to report in the SERC region on Monday, despite
assertions by various players that some units must be out.
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California ISO Congestion Index in $/MWh

Path Peak Off-peak
for 13-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 0.01 15.49

for 14-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

for 15-Jan-02 NW1 to NP15 0.19 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 23.25 24.25 25.00 26.00
February 19.50 21.00 22.75 23.75 24.00 25.00
March 17.50 19.00 22.25 23.25 23.50 24.50
April 17.25 18.75 23.50 24.50 23.50 24.50
Q2 '02 17.00 18.50 26.00 27.00 25.50 26.50
Q3 '02 30.50 32.00 39.25 40.25 38.25 39.25
Q4 '02 25.75 27.25 26.25 27.25 27.75 28.75
Q1 '03 25.50 27.00 26.25 27.25 28.50 29.50
Cal '03 27.00 28.50 30.50 31.50 31.75 32.75

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 11-Jan-02 35.25 34.18 15.40 28.52 -2.01
for 12-Jan-02 52.98 49.565 22.53 41.13 12.61
for 13-Jan-02 36.32 35.75 23.99 32.12 -9.01

BPA's Offer for 01/16/02.

Hours Amount NW delivered COB/NOB delivered
7-22 100MW Market Price* Market Price*
1-6, 23-24 100MW Market Price* Market Price*

*Market price will be determined at time of request.

NYMEX Henry Hub Gas Futures in $/mmBtu

Close Change
Feb 2.250 0.046
Mar 2.240 0.037

Natural Gas Spot Prices in $/mmBtu

Low High
Sumas 2.02 2.07
So. Cal Border 2.14 2.19
San Juan 2.00 2.05
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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.