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Western Price Survey

Week's End Edition
January 28, 2011
Prices Rebound From Hydro Glut

Increased precipitation and warmer weather in the Northwest combined to release a great deal of water into tributaries the last two weeks of January, said Bonneville Power Administration's Michael Hansen.

Warmer weather lowered electricity demand and melted some lower-level snowpack. Additions to snowpack have been made at higher elevations, Hansen said, with snowpack levels in the Upper Rockies of Canada now at 97 percent of normal.

Flows measured at the Bonneville Dam over the past two weeks have averaged 24,500 cubic feet/second, Hansen said. During January 2010, the average flow at the dam was 12,500 cf/s, and the 10-year average for the last two weeks of January is 15,500 cf/s.

Since the morning of Jan. 22, hydro generation has exceeded 10,000 MW, peaking at 15,718 MW at about 7 a.m. Jan. 28. Not surprisingly, power values at Mid-Columbia and the California-Oregon Border plummeted, with off-peak power fetching a low of $1.50/MWh at Mid-C.

But energy traders have taken note of cooler, drier weather on the way. Over the Friday-to-Friday trading period spanning Jan. 21 to Jan. 28, COB peak gained about $10.25, ending at an average of $33.84/MWh. Mid-C daytime power regained more than $6, closing at an average of $24.58/MWh. South of Path 15 peak power earned about $1.20, closing at around $37.82/MWh. North of Path 15 finished at nearly the same point, but recorded no trades on the Intercontinental Exchange for daytime power the majority of the week.

Palo Verde peak electricity prices jumped about $14 over the trading period, finishing at an average of $32.55/MWh.

Meanwhile, off-peak power prices across the West recovered as well, climbing between $4.85 and almost $12 over the trading period to reach $20/MWh and above (see chart).

According to the U.S. Energy Information Administration, an "overall softness in gas prices ran counter to an overall rebound in natural gas consumption and an increase in production." The EIA, reporting on Jan. 26, said that domestic natural gas consumption was up 3.4 percent over the previous week, primarily attributable to greater industrial and power consumption; however, residential consumption also increased.

A 174 Bcf draw from natural gas reserves provided a total of 2.542 Tcf in storage as of Friday, Jan. 21, according to the agency. The amount of working gas in storage is now on a par with last year's stores.

What's ahead: A high-pressure system building over the Pacific Ocean has meteorologists leery of predictions for Western weather beyond Sunday. Cold onshore flow out of British Columbia is expected in Seattle starting Monday, Jan. 31. There may be rain by Wednesday after drier conditions Monday and Tuesday. Meteorologists in the San Francisco area are waiting to see how the system will affect that area. They have issued a minimal forecast, predicting temperatures in the high 50s Monday through Thursday. The Los Angeles area should have higher temperatures starting Tuesday, with gusty winds expected midweek [Linda Dailey Paulson].

Western Electricity Prices
Week's End: January 24 - 28, 2011
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 12.40-378.84 8.09-42.56
Mid-Columbia 16-28.25 1.50-19.25
COB 22-36 6-24.25
NP 15* 37.75-37.90 N/A-N/A
SP 15* 34.25-38 16.75-26
Palo Verde 29-33.50 15.50-23

* 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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