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Western Price Survey

Week's End Edition
January 23, 2009
Power Prices Unmoved by Cold Eastern Weather, Natural Gas Storage Draw

The largest natural gas storage drawdown this winter and the coldest weather of the year in the East did little to lift electricity prices, which extended declines this week on mild weather and plentiful natural gas storage in the West, along with general economic languor.

A rapid decline in oil prices this week on a shortened trading schedule -- markets were closed on Monday in observance of Martin Luther King Jr. Day -- also pressured natural gas values.

Economic woes continued this week, with a flurry of blue chips posting fourth-quarter income drops of as much as 46 percent. Tech darlings Microsoft and Google even announced layoffs for the first time. Housing starts are at a 50-year low, the Commerce Department said.

The economic slowdown and specter of more rounds of layoffs and reduced consumer spending has eaten into natural gas demand. Plentiful supplies and new forecasts of milder weather in the Northeast have also cut into prices for the heating fuel. The coldest weather of the winter along the Eastern seaboard didn't appear to dent prices.

Henry Hub spot prices were trading around $4.69/MMBtu Friday, a decline of more than 50 cents compared to levels last week. In the West, day-ahead prices declined by 10 to 70 cents/MMBtu and hit a low of $2.80/MMBtu at San Juan, a level not seen since 2002.

Natural gas in storage shrank by 176 Bcf last week -- the largest withdrawal this winter -- to 2.560 Tcf, according to the U.S. Energy Information Administration. Compared to a year ago, storage is 0.8 percent lower, but it is 1.2 percent higher than the five-year average.

Storage abounds in the West. Although last week saw a drawdown of 8 Bcf to 361 Bcf, levels are now 8.7 percent higher than last year and 12.1 percent above the five-year average.

A new storm from the Pacific dropped as much as one inch of rain in central California on Thursday, but left much of the rest of the state dry, AccuWeather said. In areas of the state, rainfall is off by as much as 50 percent and could mean drastic water conservation measures this summer. Additional storms are on the way, and could drop more rain in the coming week. Cold air flowing down from north and east of the Golden State will also push snow to lower elevations in the Sierras.

Showers were likely in San Francisco and Los Angeles this weekend, with temperatures in the high 50s and mid 60s, respectively. Phoenix may even see some rain today, though it's not expected to last. Temperatures are in the low 70s.

California power demand climbed from 30,300 MW on Monday to 30,600 MW on Wednesday, the California Independent System Operator reported. Usage declined on Thursday from 30,500 MW and was expected to touch 30,000 MW on Friday and 29,300 MW this weekend.

Over the course of the week, daytime California electricity prices lost $5 to average $41.47/MWh at NP-15. Prices were nearly static at SP-15 at around $40. Average nighttime trades fell $3 to $33.75/MWh in the north and climbed about $5 to $31.60/MWh in the south.

Peak Palo Verde trades were nearly even at an average of $34.05/MWh, an 82-cent decline. Average off-peak values inched up $2 to $26.48/MWh.

It's mostly sunny in Portland and Seattle today, with a high of 47 and 41 degrees Fahrenheit in each city. This weekend, however rain and snow may fall, dropping temperatures into the mid 30s.

Peak California-Oregon border prices were essentially flat this week, ending at an average of $42.06/MWh, down 86 cents. They had dropped as much as $4 before recovering on Friday. Off-peak trades slipped about $2 to average $35.50/MWh.

Average daytime Mid-Columbia prices dropped about a meager 80 cents to $39.61/MWh. Off prime prices lost over $2 to average $34.23.

On Monday, the Columbia Generating Station in Washington, which can produce up to 1,150 MW, was back to full operation following repairs to a feedwater pump. Palo Verde's 1,336 MW second unit was online last weekend after its transformers had been checked for problems [Kristina Shevory].

Western Electricity Prices
Week's End: January 19 - 23, 2009
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 22.48-999.99 35.43-854.29
Mid-Columbia 35.25-42.50 28.50-38
COB 38-44.50 30-39
NP 15 38-47.50 29.75-38.25
SP 15 35.75-48 23-34.25
Palo Verde 29.50-37 19.75-28.75

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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