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Western Price Survey

Week's End Edition
January 30, 2009
Western Power Prices Rise Slightly on Uptick in Natural Gas Values

Egged on by a small increase in natural gas prices, Western power prices made small gains of $2 to $6/MWh this week, despite falling electricity demand in California.

Western natural gas spot prices posted slight increases of 5 to 19 cents/MMBtu. Prices extended from $3.40/MMBtu at the San Juan Basin to $4.81/MMBtu at Pacific Gas & Electric's CityGate.

Yet contract and spot natural gas prices are down nationally as much as 54 percent below the same time last year, the U.S. Energy Information Administration said. Prices are likely to remain soft thanks to a domestic natural gas boom, low crude prices and a recession that has shaved energy demand.

Although weather was frigid in the Northeast over the past week, it didn't seem to matter because traders continued to focus on the economy and brimming supplies of natural gas. Prices were relatively flat for Henry Hub futures, with prices on NYMEX closing down 8 cents from Monday to $4.41/MMBtu.

Natural gas in storage across the country fell to 2.374 Tcf, down 186 Bcf as frigid weather gripped the Eastern Seaboard, the EIA said. Stockpiles are now 1.5 percent above last year and 1.2 percent higher than the five-year average.

Warm weather in the West kept the weekly drawdown limited to 7 Bcf. At 354 Bcf, supplies are 19.6 percent above last year's levels and 18 percent higher than the five-year average.

California power demand hit a high of 30,700 MW on Tuesday and then fell to 30,000 MW on Thursday, and was expected to tap 29,800 MW on Friday, the California Independent System Operator said. This weekend, usage is expected to drop to 28,900 MW.

Electricity prices, however, rose slightly in response to the increase day-ahead natural gas trades. Over the week, peak California prices increased $3 to average around $46/MWh at North of Path 15 and South of Path 15. Average nighttime trades posted a $4 rise at the northern hub to $36.94/MWh and almost $6 in the south to $36.20/MWh.

Palo Verde peak trades added over $4 to an average of $38.30/MWh, while off-peak values swelled by $5 to$30.04/MWh.

At the California-Oregon border, peak prices climbed $2 since Monday to average $44.33/MWh. Average off-peak power values were at $39.29/MWh, up over $4. Average prime Mid-Columbia trades rose $4 to $42.26/MWh, while off prime values eked out a $4 increase to $38.05.

Some interesting dynamics are in play between the Northwest and California. December's mild weather in California helped shave the average hourly load by 2.1 percent compared to the same month in 2007, Cal-ISO said in a monthly report. The average daily peak was 1.7 percent lower than the same time last year.

Natural gas prices also dipped last month from an average $5.98/MMBtu at the start of the month to $5.52/MMBtu by year's end. The drop came even though Northern California prices outpaced national prices thanks to frigid weather in the Northwest. Less natural gas flowed to Northern California because the Northwest was using so much of it to power its electric plants and keep residents warm, according to Cal-ISO.

The Diablo Canyon nuclear power plant near San Luis Obispo, Calif. sidelined its first 1,138 MW unit last Sunday to refuel and replace its four steam generators, and is expected to resume full operation in a few months. The second unit went through a similar procedure last February. Farther down the coast near San Diego, the San Onofre Nuclear Generating Station has its 1,070 MW second unit offline for maintenance. There is no date for its reopening.

As for what's ahead, the West Coast gets a sunny weekend, with barely any rain this weekend thanks to a band of high pressure hanging over the area, AccuWeather said. California will be dry this weekend, thought the Northwest may see a few showers on Saturday. Portland and Seattle residents should expect temperatures in the mid 40s. It will be sunny and mild in California this weekend, with temperatures in the mid 60s in San Francisco and the high 70s to low 80s in Los Angeles. It will be calm in Southern California this weekend as Santa Ana winds, which had reached as high as 50mph this week, will die down today [Kristina Shevory].

Western Electricity Prices
Week's End: January 26 - 30, 2009
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 17.91-427.62 19.37-73.88
Mid-Columbia 35.25-44 30.25-41
COB 37-45.50 31.25-40
NP 15 40.50-49.15 30.75-37.75
SP 15 40-48.75 29.50-37.25
Palo Verde 33.25-40.50 24-31.25

Archives of the Western Price Survey for the past year are also available online.


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