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Western Price Survey

Febuary 2, 2007
Cold Witch of the East Takes California Electricity Prices on a Wicked Ride

Wholesale power prices remained aloft in the West this week as a bitter cold front pressured natural gas prices in producing states and Canada where California draws fuel for power generators.

A number of factors this week might have pushed prices downward. High temperatures through the weekend, for instance, are expected to hit 78 degrees in Los Angeles, 68 degrees in San Francisco and 77 degrees in Palo Verde. Also, the 1,247 MW Unit No. 3 of the Palo Verde nuclear plant returned to full service this week on Friday, and system demand fell. The California Independent System Operator predicts demand will fall by about 400 MW today after remaining at roughly 31,500 MW most of the week.

Yet prices rose. Power values in California and the Northwest, particularly for off-peak electricity, seem to have felt higher gas prices and the approaching chill in the Midwest and East, which will reportedly get hit with the coldest air in a year.

At North of Path 15 and South of Path 15, off-peak power traded modestly Monday for about 50 mills/kWh. Then values wobbled between 49 mills and 56 mills/kWh on Thursday before jumping to about 59 mills/kWh for deliveries next Monday.

Meanwhile peak prices at the California hubs took a roller-coaster ride. High-demand power went for about 66 mills/kWh Monday, ascended to 70 mills on Wednesday, shed about 5 mills the next day, and got those mills back Friday.

In the Northwest, at Mid-Columbia, off-peak power gained about 10 mills throughout the week and finished in Friday trading at 61 mills/kWh--notably just a few mills shy of peak values. Nighttime power at the California-Oregon border was at around 63 mills/kWh Friday, a gain of about 10 mills from where it started Monday.

Northwest peak prices mimicked the California seesaw. Mid-Columbia peak power began the week trading between 55 mills and 61 mills/kWh, climbed to a high of 68.50 mills/kWh Wednesday and then fell to around 64 mills/kWh in Friday trading. High-demand power at the California-Oregon border traded Monday at 63 mills/kWh, reached 70 mills/kWh the next day, and finished the week trading around 67 mills/kWh.

At Palo Verde, peak power traded Friday between 63 mills and 65 mills/kWh, a jump of a few mills from Monday. Off-peak power, however, went from 54 mills to 57 mills/kWh today after starting the week trading at about 48 mills/kWh [Chris Raphael].

Cold Front Ignites Natural Gas Prices

The U.S. Energy Information Administration on Thursday reported a natural gas storage withdrawal of 186 Bcf with traders initially seeing the draw as less than expected, which in turn caused gas futures to tumble 13c on Thursday. But as traders fretted over the Midwestern and Eastern cold front, futures regained value.

Permian Basin natural gas traded a bit below $7/MMBtu at the start of the week, gained 20c on Wednesday, and hit a high of $7.52/MMBtu in Thursday trading before spreading from $7.10 to $7.49/MMBtu today.

San Juan Basin gas also traded below $7 to start the week, but hit a summit of $7.35/MMBtu in Thursday trading. The commodity was priced between $7.12 and $7.28/MMBtu for Saturday-through-Monday deliveries. British Petroleum recently announced it would invest $2.4 billion over 13 years to keep San Juan Basin production at present levels.

Also of note, the price of gas at the Alberta Hub gained nearly 50c on Wednesday and Thursday, after trading close to $7/MMBtu at the start of the week. Southern California border gas hit $8.02/MMBtu Wednesday, gaining nearly $1 from values traded Tuesday and Wednesday. The commodity finished the week between $7.21 and $7.47/MMBtu.

According to a monthly energy review released last Friday by the EIA, the average price of natural gas received at generating stations was $7/MMBtu for the first nine months of 2006. The figure compares to a price of $7.53/MMBtu for the first nine months of 2005. The use of natural gas for generation, for the first 10 months of 2006, totaled 5.318 Tcf, compared to 4.971 Tcf for the first 10 months of 2005 [C. R.].

Western Electricity Prices
Week's End: Jan. 29 - Feb. 2, 2007
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 30.46-674.37 8.67-71.47
Mid-Columbia 55.50-68.50 48-62.50
COB 62-70 50-63.50
NP 15 61.50-72.25 50.25-59.50
SP 15 54-72 48.75-59.75
Palo Verde 59.50-66.50 44.60-57

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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