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Western Price Survey

Week's End Edition
February 11, 2011
Prices Dip with Mild Weather

Western energy prices dipped significantly following surges last week caused by winter weather in Texas and the Southwest.

Both natural gas and average electricity prices in the West were lower by Friday, Feb. 11, based on expectations of mild, warmer weather across the nation.

Natural gas trades in particular fell. Southern California Border gas lost 63 cents since Feb. 4, trading Friday at an average price of $3.89/MMBtu. Permian Basin gas, which posted a high price of almost $8.05/MMBtu last week, recorded a high of only $4.48/MMBtu during the trading period.

Meanwhile, natural gas futures, at $3.91/MMBtu Feb. 11, dropped 9 percent for the week and were at 12-week lows. "Futures are on track for the lowest winter peak since 2001-2002," noted Enerfax.

As of Friday, Feb. 4, approximately 2.144 Tcf of gas existed in storage -- 98 Bcf below last year's level and 45 Bcf below the five-year average, according to the U.S. Energy Information Administration. This is the first time since January 2010 that stocks have fallen below the five-year average, the EIA noted.

The agency's Short-Term Energy Outlook estimates total natural gas consumption will remain flat this year compared with last year, with expected consumption increases in the electric power and industrial sectors offset by less residential and commercial use. The report also states that the 2.9 percent increase predicted for the electric-power sector use should result in higher prices and, in turn, add incentive for producers to step up production.

Western power prices fell over the Friday-to-Friday trading period Feb. 4 to Feb. 11. Most hubs saw losses of $2 to $4 (see chart), but Palo Verde, which rose last week on natural gas shortages in the Southwest, took the greatest hit, tumbling almost $12.40 during the trading period. The hub closed with an average price of $29.92/MWh Friday.

In California, South of Path 15 peak power lost $2.25, closing at an average of $40.04/MWh. North of Path 15 finished at $37.45/MWh, down about $2.70 versus the previous Friday.

Meanwhile, off-peak power prices fell by as much as $18.50; the California-Oregon Border hub posted the greatest loss, ending trading at about $7.95/MWh Friday.

Mid-Columbia posted a zero-value spot price for off-peak power Thursday, and averaged $2.30/MWh at Friday's close. Outflow from Bonneville Dam has been extremely strong, at more than 234 cubic feet per second on Thursday, compared to an average of 125 cfs in January of last year.

What's ahead: The Seattle forecast calls for wet weather starting Monday, Feb. 14, possibly continuing through Thursday, with temperatures in the 40s. Showers are anticipated in San Francisco Monday through Thursday, with cooler weather expected Wednesday and Thursday. Even the Los Angeles area should see rain; the forecast calls for showers midweek and temperatures in the high 50s [Linda Dailey Paulson].

Western Electricity Prices
Week's End: February 7 - 11, 2011
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 14.34-999.98 8.09-113.44
Mid-Columbia 17-34.50 0-23
COB 23.50-36.75 5-24
NP 15* 33.35-37.60 21-26.25
SP 15* 34.50-43 18.50-27.25
Palo Verde 28-37.75 18-25.50

* 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.


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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