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Western Price Survey

January 22, 2016
Generators Could Set Record for Burning Natural Gas as Prices Fall

Lower natural gas prices and more gas-fired power plants coming on line are contributing to increased use of the fuel for power generation.

Since Jan. 1, natural gas used for electric power generation has averaged 26.0 Bcf per day, according to the U.S. Energy Information Administration. This is 24 percent higher than the five-year average and 3 percent higher than the five-year maximum.

The EIA says "the growth in power burn this month has occurred despite electricity-weighted heating degree days that were close to average nationally and in the Southeast region."

The agency also stated that preliminary data from Bentek indicates 2015 may be a record-high year for power burn. Natural gas used for power generation averaged 26.4 Bcf/d in 2015, it noted. This is 6.8 percent greater than the next-highest annual average, which was recorded in 2012.

Working natural gas in storage totaled 3,297 Bcf as of Jan. 15, according to EIA estimates. This is a net decrease of 178 Bcf compared to the previous week. Storage levels are now 23.6 percent greater than a year ago and 16.7 percent greater than the five-year average. The Pacific region recorded a 14 Bcf withdrawal.

Henry Hub gas spot values added a penny in Thursday-to-Thursday trading, ending at $2.20/MMBtu Jan. 21. Western natural gas average values moved lower, eroding between 3 and 14 cents in the trading period. Stanfield posted the greatest loss, down 14 cents to $2.06/MMBtu.

Markets were closed Jan. 18 in observance of the Martin Luther King Jr. holiday.

Meanwhile, average Western peak power prices varied in Jan. 15 to Jan. 22 trading. South of Path 15 added $2 to an average of $31.25/MWh while Mid-Columbia shed 90 cents, ending at $22.05/MWh.

Nighttime power values saw similar movement. While Palo Verde added 20 cents to hit $19.20/MWh, Mid-Columbia lost $1.40, ending at $20.15/MWh.

Demand peaked on the Cal-ISO grid at 28,852 MW Jan. 19, which should be the week's high. Total renewables production reached 8,599 MW Jan. 15.

What's ahead: The West Coast should see above-normal temperatures and above-median precipitation in February, based on the latest forecast from the National Weather Service Climate Prediction Center. Conditions continue to be driven by El Niño; the current event remains the strongest on record, with its effects to be seen throughout the month [Linda Dailey Paulson].

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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