Western Price Survey
February 8, 2019
A combination of constricted natural gas supplies across the region and weather-driven power demand propelled Western energy prices into the stratosphere.
Western natural gas hubs’ prices ranged widely, with both losses and extreme gains in Jan. 31 to Feb. 7 trading. El Paso-Permian Basin and Sumas natural gas exemplified those polar extremes.
El Paso-Permian Basin natural gas prices were suppressed by a force majeure on El Paso Natural Gas’ Line 1600, called because of a potential leak. Westbound flow constrictions pushed El Paso-Permian Basin natural gas to a low of 42 cents/MMBtu Feb. 4; the price recovered to $1.28/MMBtu by Feb. 7, a 75-cent loss since the beginning of the trading period.
Additionally, continued restrictions on Enbridge’s British Columbia pipeline caused Sumas gas to shoot up above $22/MMBtu Feb. 6; it ended at $19.52/MMBtu.
In Southern California, Aliso Canyon withdrawal capacity was reduced approximately 420 MMcfd based on unplanned above ground pipeline repairs that started Feb. 1. Southern California Gas Co. has not provided a date by which the pipeline is expected to return to service, but 200 MMcfd of capacity was reported as having been restored Feb. 7.
Coupled with inventory levels, this prompted the utility to institute low operational flow orders daily from Feb. 1 through Feb. 8, “as well as an unusual electric generation curtailment to ensure adequate natural gas supplies,” the U.S. Energy Information Administration stated in its weekly report. SoCal CityGate natural gas gained $16.25 to end at $20.09/MMBtu.
High natural gas prices and OFO penalties “are contributing to elevated power prices in Southern California as some feared,” Enerfax said in its Feb. 8 report.
Western daytime power prices gained between roughly 145 percent and almost 300 percent in trading. By Feb. 7, Western peak power prices ranged from $76/MWh at Palo Verde to $139.20/MWh at Mid-Columbia. The latter hub gained the most in trading, up $104.05/MWh, or almost 300 percent.
Off-peak power prices saw similar gains, with South of Path 15 up $74.50 to $112.70/MWh. California-Oregon Border values, however, gained 221 percent to reach $107.50/MWh by Feb. 7.
In January, the average high peak price at Henry Hub was $3.61/MMBtu, $3.27 less than in 2018 (see “Price Trends,” next page).
Western natural gas prices in January varied year over year. In January 2019, PG&E CityGate natural gas was $4.57/MMBtu—$1.22 greater than in 2018. SoCal Border was $1.04 less at $4.62/MMBtu.
Average Western power prices generally added between 75 cents and as much as $11.20 January over January. North of Path 15 was $11.20 higher than in 2018 at $54.80/MWh; however, Palo Verde shed a dollar year over year to $35.75/MWh.
Archives of the Western Price Survey for the past year are also available online.
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