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Western Price Survey

Week's End Edition
January 29, 2010
Power Prices Decline on Retreating Natural Gas, Power Demand

Electricity prices plunged steadily this week as natural gas prices and power demand ebbed.

Western gas prices fell by 40 cents/MMBtu on average this week. Spot gas prices ranged Friday from $5.16/MMBtu at the Permian Basin to $5.61 at Pacific Gas & Electric's CityGate.

On Nymex, crude prices retreated about $1 this week to $74.30 per barrel on Friday, a one-month low, as worries linger over slack demand.

Power prices, however, could stage a rebound next week if another storm barreling toward the West Coast proves half as powerful as the string of storms that pummeled California and Arizona last week.

Since Monday, California daytime power prices gave back $5 statewide to $49.41/MWh at North of Path 15 and $48.90 at South of Path 15. Across the state, nighttime trades decreased more than $2 to $38.63/MWh in the north and $37.55 in the south.

Palo Verde peak values slipped $5 to average $42.98/MWh, while off-peak prices were down over $3 to $31.83.

Rain will return to Northern California early next week, with temperatures in the mid-50s, the National Weather Service said. Los Angeles and Phoenix get a reprieve from the rain and will enjoy sunny skies and temperatures in the mid- to upper 60s.

Peak electricity usage in California ebbed from 30,900 MW on Monday to 30,100 MW on Thursday and was forecast to fall to 29,200 MW on Friday, the California Independent System Operator reported.

At the California-Oregon border, peak trades fell $5 to average $47.12/MWh. Average off-peak values declined more than $3 to $38.50. Mid-Columbia peak and off-peak prices dropped more than $3 to settle at an average of $45.99/MWh and $38.65/MWh, respectively.

Through early next week, the chance of rain will taper off in Portland, while in Seattle, rain will become increasingly likely. Temperatures will be in the low 50s, the National Weather Service said.

Warm weather shaved the withdrawal of natural gas last week to 86 Bcf, or 50 percent lower than last year, the U.S. Energy Information Administration reported. At 2.521 Tcf, natural gas storage stands 5 percent higher than last year and 3.6 percent larger than the five-year average.

Western working gas in storage dipped 16 Bcf to 380 Bcf, but is 7 percent higher than last year and 18.8 percent larger than the five-year average.

As supplies dip, drillers have brought more rigs back on line in expectation of rising prices. For the fourth week in a row, the rig count rose by double digits, climbing by 28 rigs to 861, Baker Hughes, a Houston oilfield-services firm, reported Friday.

Energy companies are betting that the winter will turn cold and the economy will recover, increasing demand for natural gas. Past history has shown that the natural-gas rig count lags Henry Hub prices by a few weeks, the EIA said.

Henry Hub spot prices fell to $5.14 MMBtu on Nymex Friday, down 62 cents on the week. But spot prices have more than doubled since September, when they bottomed out around $2/MMBtu.

Diablo Canyon's two nuclear units, which each can generate up to 1,130 MW, came back to full power over the weekend. Operators had ramped down the plant by half because big storms whipped up large waves that increased pressure and pushed debris into the plant's water intake system. The San Onofre Nuclear Generating Station still has its 1,070 MW second unit off line for the replacement of its two steam generators [Kristina Shevory].

Western Electricity Prices
Week's End: January 25 - 29, 2010
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 34.92-177.05 12.94-45.03
Mid-Columbia 43.50-50.75 37.25-43.50
COB 45.25-53.50 37.50-44.25
NP 15* 48-54.50 38.25-43.50
SP 15* 47.25-56 37-42.30
Palo Verde 42-50 31.50-38.50

* 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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