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Market Analysis Report

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Summary:

Market Analysis Report for July and August, 2002, Board of Governors Meeting, September 19, 2002

Extract:

July 2002 was characterized by high loads due to extreme high temperatures and multiple changes in the price cap in the ISO markets, followed by a relatively mild August. During the heat wave of July 8-11, supply conditions reached near-critical levels. The monthly peak system load reached 42,352 megawatts (MW) in July, the highest since the crisis period of August 2000, but retreated to 40,771 MW in August 2002. In spite of this unusually high load, the average total cost of energy and ancillary services (AS) increased only modestly to $44 per megawatt-hour (MWh) in July, and retreated to $43/MWh in August, as utilities continue to serve load under long-term contracts procured by the California Department of Water Resources (CDWR) on their behalf. Marketclearing prices for incremental (INC) and decremental (DEC) energy in the ISO’s real-time Balancing Energy Ex-Post Price Auction (the BEEP Stack) averaged $51.40 and $8.90/MWh in July, and $46.72 and $9.94/MWh in August. Congestion costs remained high in July, as transmission path deratings, primarily due to technical constraints, continued to constrict flows from the Pacific Northwest into California and the Southwest. By August, these congestion costs abated substantially.

Document Locations:

• Market Monitoring - 2002 Reports and Presentations