Western Price Survey
Week's End Edition
Cold weather tugged power prices upward this week, as electricity values followed a cold snap that descended upon the West.
California weather began the week balmy, but low temperatures in some areas of San Francisco on Friday dropped below freezing and were predicted to be in the high 30s even in Los Angeles. The cold front is expected to ease starting this weekend, but not before some areas break cold-weather records.
Predictably, power values rose as the chill arrived. California-Oregon border peak power traded tightly around 53 mills/kWh on Monday, shot up to 60 mills/kWh the next day, and remained there until Friday when it lost one or two mills, as traders anticipated weather to warm just a bit for deliveries this coming Monday, the Martin Luther King Jr. holiday, and Tuesday. Off-peak power was at 43 mills/kWh in Monday trading this week, climbed to about 54 mills/kWh on Wednesday, then settled at about 46 mills/kWh on Friday.
Peak power in the Mid-Columbia region was around 49 mills/kWh Monday, but flirted with 60 mills/kWh in Tuesday and Wednesday trading before settling around 54 mills/kWh Friday. Nighttime power was at its low price of 39 mills/kWh to start the week, but finished around 45 mills/kWh.
In California, North of Path 15 and South of Path 15 power went for around 57 mills/kWh for Tuesday deliveries and rushed past 60 mills/kWh in midweek trading. Values for low-demand power were around 43 mills/kWh for Tuesday deliveries, but went as high as 56 mills/kWh in Thursday trading.
High-demand power at Palo Verde went near 50 mills/kWh Monday and gained a few mills over the next few days. Values for off-peak power settled between 39 mills and 43 mills/kWh on Friday, after reaching nadir of 38 mills/kWh on Monday and a summit of 52 mills/kWh midweek.
The California Independent System Operator reported between 5,500 MW and 6,500 MW of grid limitations this week. Most notably, the 1,020 MW Big Creek hydroelectric plant was on an unplanned outage and was operating below 50 percent capacity through the week. The 682 MW Unit No. 7 of the Pittsburg power plant was on a planned outage, as was the 493 MW Unit No. 7 of the Redondo Beach plant [Chris Raphael].
Gas Prices Vacillate on Mixed News
While a cold front cajoled low temperatures just below freezing in some parts of the state Friday, withdrawals of natural gas from storage have not substantially diminished supplies.
On Thursday, the U.S. Energy Information Administration reported total withdrawals of 49 Bcf for the week ending Jan. 5, with most of the withdrawals in the East. Gas stocks are still 401 Bcf above last year's level and 18 percent above the five-year average.
Permian Basin gas was the most volatile. While it started the week tightly around $5.85/MMBtu, by Friday it was trading between $5.72 and $6.30/MMBtu. San Juan Basin gas, also valued Monday and Tuesday at the Permian price, went for between $5.70 and $6.15/MMBtu Friday.
Values for gas at the Southern California border reached $6.55/MMBtu in Wednesday trading, but spread between $5.97 and $6.23/MMBtu on Friday.
In a short-term energy outlook released Tuesday, the EIA reported that a warm December kept natural gas prices low, but values would "remain sensitive to any periods of sustained cold weather during the remainder of this winter heating season." The Henry Hub price averaged $6.94/Mcf in 2006 and is expected to average $7.06/Mcf in 2007 with a moderate winter and cooler summer.
At odds with a recent U.K. report that predicted 2007 to be the warmest year on record--even breaking the record set last year--the EIA also reported that summer temperatures are expected to return to normal this year, with 10 percent fewer cooling-degree days. The EIA stated that residential electricity prices are expected to grow at a more modest rate this year, 2.5 percent, but certain areas in the east and Southwest could see higher rates from deregulation and the expiration of price caps [C. R.].
Archives of the Western Price Survey for the past year are also available online.
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