Western Price Survey
Week's End Edition
Conditions throughout the Pacific Northwest continue to be dry, with below-normal precipitation and low snowpack.
In its first briefing of the 2012 water year, the National Oceanic and Atmospheric Administration's Northwest River Forecast Center predicted drier-than-normal weather through spring. Senior hydrologist Stephen King said precipitation should be on a par with the 2003, 2005, and 2010 water years, in which there was also low spring runoff.
There has been little rain in the region since Nov. 1, 2011; snowpack has been similarly lacking in both the Snake River Basin and the Cascades. King said streamflow should be at about 82 percent of normal in 2012, although he emphasized there is "a lot of season to come," adding that the region's ample flows last year were the result of mid-March rainfall. "It's dry now, but that doesn't mean that's where we're going to end up."
California is also expected to have a dry winter, with the California Department of Water Resources stating that both snowpack and precipitation could see record lows.
Despite the possibility of record-low snowpack throughout the West, it's equally likely that extremely cheap natural gas could lessen any price volatility.
There may, however, be a new wrinkle in the natural gas market: insufficient storage capacity. "Natural gas inventories are falling less than expected this winter, raising concerns that the nation could run out of storage volume next fall," stated Enerfax.
The U.S. Energy Information Administration, in a Jan. 10 Short Term Energy Outlook, stated it expects record inventory levels, with October 2012 and 2013 estimated at about 3,960 Bcf and 3,990 Bcf, respectively; that could result in temporary production shut-ins and further price declines.
Working gas in storage reached 3,377 Bcf as of Friday, Jan. 6, according to EIA estimates, a net decrease of 95 Bcf from the previous week.
In the Jan. 6 to Jan. 13 trading period, peak prices in the West were nearly flat (see chart) but Northwest daytime power prices edged up a couple of dollars. Prices tended to trade around $30/MWh or a bit below.
Average nighttime prices were mixed, with Northwest hubs posting nominal gains. Prices ranged from $21.35 to about $26.15/MWh (see chart).
Peak use on the Cal-ISO grid reached 30,104 MW the evening of Wednesday, Jan. 11 though demand of 32,781 MW was forecast for Friday evening. Northwest Power Pool peak demand reached 59,633 MW Thursday.
What's ahead: A front reaching the West Coast around Jan. 19 may bring precipitation. Los Angeles is forecast to reach 70 °F Thursday. The San Francisco area remains dry with temperatures above seasonal norms into Tuesday. By Thursday, there may be a chance of rain. Portions of the Pacific Northwest could see a dusting of snow Monday, lingering into Tuesday [Linda Dailey Paulson].
* 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.
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