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Western Price Survey

Week's End Edition
January 7, 2011
Gas Demand Strong, Power Prices Up

Demand for natural gas continues to be strong throughout the United States, thanks to colder weather coast to coast. More cold weather is expected in the Pacific Northwest during the week ahead, and California temperatures remain below seasonal norms.

According to the U.S. Energy Information Administration, a 135 Bcf draw from natural gas reserves provided a total of 3.097 Tcf in storage as of Friday, Dec. 31, marking the fifth consecutive week that there has been a greater-than-normal draw from national gas stores. The net draw of 135 Bcf is larger than the five-year average draw of 79 Bcf, but less than last year's draw of 149 Bcf for the report week.

The EIA stated that although weather was unseasonably cold across most of the United States for the report week, a backdrop of robust storage mitigated the overall price rise.

As cold weather continued, however, natural gas spot prices continued to gain value. During the trading period spanning Thursday, Dec. 30 to Friday, Jan. 7 (energy markets were closed on Dec. 31), the average price for Southern California Border gas jumped about 24 cents to reach $4.48/MMBtu. Meanwhile, PG&E CityGate gas earned 14 cents to hit $4.54/MMBtu, and Malin average gas prices climbed 18 cents, ending at $4.44. Western hubs tracked movement in Henry Hub spot gas, which was up more than 20 cents to an average of $4.42.

For electricity prices over the same trading period, Mid-Columbia jumped almost $8, closing Jan. 7 at an average of $42.06/MWh. California-Oregon Border peak power earned $7.75, finishing at an average of $43.25/MWh.

California hubs climbed between about $2.55 and $3 during the trading period, with both North of Path 15 and South of Path 15 peak power hitting a high of $41/MWh. Palo Verde gained about $3 for peak power during the week, trading for an average of $39.29/MWh by Friday's close.

As for off-peak prices, values ranged between $32.75 and $38.70/MWh on Friday, with most hubs gaining a few dollars over the trading period (see chart).

Peak demand on the Cal-ISO grid reached 31,307 MW Wednesday at 6 p.m., which was the week's high.

What's ahead: Meteorologists are waffling about the possibility of a major snowstorm for the Pacific Northwest that could start Tuesday or Wednesday. Seattle expects temperatures in the high 30s Monday through Thursday, with a mix of rain and snow likely Wednesday and Thursday. It is possible that this could be "a classic snow event," but forecasters say they don't yet have complete confidence in adding snow to their predictions. Portland-area meteorologists expect snow Tuesday through Thursday thanks to an influx of cold Canadian air, with "a major winter storm" likely. Temperatures aren't expected to break the high 30s during the week.

The greater San Francisco area should have temperatures in the mid-50s Monday through Thursday, with a slight chance of rain Tuesday. A warming trend in the Los Angeles area should start Monday; however, despite continued warming throughout the week, temperatures should remain below seasonal norms. A possibility of negligible precipitation is forecast for Tuesday as well as Thursday [Linda Dailey Paulson].

Western Electricity Prices
Week'w End: January 3 - 7, 2011
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 22.58-90.59 19.10-65.10
Mid-Columbia 33.50-43.50 30-40.75
COB 35-44 35-40.25
NP 15* 36.25-41 31.55-31.60
SP 15* 36.25-41.20 28-33.25
Palo Verde 34.25-44 25.25-34

* Prices represent both day-ahead locational marginal prices (financial swaps, or EZ Gen DA LMPs) and quasi-swap prices (EZ Gen) as reported by ICE.

Archives of the Western Price Survey for the past year are also available online.

The Western Price Survey is excerpted from Energy NewsData's comprehensive regional news services. See for yourself how NewsData reporters put events in an accurate and meaningful context -- request a sample of either or both California Energy Markets and Clearing Up.

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Contact Chris Raphael, editor with questions regarding Price Survey Content.

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