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Western Price Survey

Week's End Edition
January 15, 2010
Power Prices Relatively Calm Ahead of Large Winter Storm

Western electricity prices perked up on projections of heavy snow and rain next week. Spot natural gas prices were flat and provided no support to prices.

On Friday, peak and off-peak power was bought and sold for Tuesday. Markets will be closed on Monday for the Martin Luther King Jr. Day holiday.

Beginning this weekend, the West Coast will be pummeled by the strongest string of storms so far this winter. Nearly every day, California will get rounds of heavy rain and mountain snow, with one or more storms bringing 6 inches of rain, according to AccuWeather. The Sierras will get up to 4 feet of snow.

Average California daytime prices ended the week nearly flat at $50/MWh at North of Path 15 and South of Path 15. Nighttime trades tacked on almost $2 across the state, settling at $40.33/MWh in the north and $39.06/MWh in the south.

Since Monday, prime Palo Verde prices rose over $3 to an average of $49.04/MWh; off-prime values increased $1 to $36.13.

In California, peak power demand declined from 30,400 MW on Monday to an expected 29,400 MW on Friday, according to the California Independent System Operator.

At the California-Oregon border, average peak and off-peak prices added $3 to average $50.22/MWh and $41.25, respectively.

Trades for daytime power at Mid-Columbia gained over $4 to average $47.82/MWh, while nighttime power rose more than $5 to $42.02/MWh.

Portland will cool slightly into the upper 40s, while Seattle weather will remain in the low 50s, according to the National Weather Service. Snow is expected in the Cascades by Tuesday and will come at a good time. El Niño has kept the weather warm and dry, resulting in a lower-than-average snowpack. Washington state should have half of its snowpack by now, but is at 35 to 40 percent, according to USDA's Natural Resources Conservation Service.

At the Palo Verde nuclear plant, the 1,336 MW first unit has been operating at 60 percent capacity since Wednesday as crews fix a feedwater pump. The San Onofre Nuclear Generating Station's 1,070 MW second unit remains sidelined for the replacement of two steam generators.

A huge mass of freezing cold Arctic air covered most of the country through Monday and drove last week's withdrawal of natural gas to its second-highest level on record, the U.S. Energy Information Administration reported. The highest drawdown of 274 Bcf was recorded for the week ended Jan. 25, 2008.

Last week, natural gas supplies dove 266 Bcf to 2.852 Tcf, but inventories were still 3.7 percent above last year and 4.4 percent higher than the five-year average. It was the first time supplies fell below 3 Tcf since July 2009.

Western stockpiles dipped 20 Bcf to 414 Bcf and now stand 11.3 percent greater than last year, and 14.7 percent above the five-year average.

By midweek, natural gas prices fell as the weather warmed and liquefied natural gas shipments and Canadian imports climbed. Deliveries from LNG terminals blasted past the five-year maximum for this time of year, hitting 4.4 Bcf per day on Jan. 8, according to Bentek Energy. That topped the previous record of 4.2 Bcf per day set on Aug. 9, 2007.

What's Ahead: Rising production, lackluster consumption and a supply glut will keep Henry Hub prices relatively moribund over the next two years, according to EIA's Short-Term Energy Outlook, released Tuesday. Average prices at the benchmark Henry Hub were $4.06/Mcf last year and are projected to rise to $5.36/Mcf in 2010 and $6.12/Mcf in 2011.

Residential electricity prices will rise modestly, posting an expected average of 11.6/kWh this year, 11.5 cents next year and 11.7 cents in 2011.

Electricity use is expected to rise by 1.9 percent in 2010 as air-conditioner use returns to normal in the summer and the economy improves. Wind, nuclear and coal-fired generation will boost power generation from 10.8 billon kWh a day last year to 11 billion kWh in 2010 and 11.2 billion kWh in 2011 [Kristina Shevory].

Western Electricity Prices
Week's End: January 11 - 15, 2010
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 22.99-71.65 12.86-45.39
Mid-Columbia 41.25-49 36-43
COB 45.50-51.25 36.75-43
NP 15* 48.50-51.25 38-43
SP 15* 48.25-51.50 37-42.50
Palo Verde 44.75-50 33.75-40.50

* 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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