Western Price Survey
Week's End Edition
Power prices across the West this week appeared to be moving very little until an across-the-board drop on Friday, most apparent in off-peak prices.
Power traded on Friday has a tendency to naturally rise, since the trades are made for Monday delivery when demand on the grid is expected to be higher. Yet nighttime power at Palo Verde came in almost $8 lower than Thursday's average of $42.56. South of Path 15 off-peak dropped $5.29 over Thursday's similar average of $42.10. And Mid-Columbia off-peak came in $4.60 lower than Thursday, but ended the week down only $1.56 overall.
Average prices for peak power at Mid-C barely moved a dollar either way until Friday's $2.33 drop over Thursday's average.
Palo Verde peak prices edged up early in the week, staying above $50 until coming down $2 Friday, ending the week down $2.98 and at $47 on average.
In natural gas markets, Monday's prices proved to be the highest for the week as most Western hubs ended the week down 23 cents to 33 cents/MMBtu. Malin ended Friday at an average of $5.34, El Paso Permian at $5.26, and San Juan Blanco reached $5.24.
Natural gas futures for March delivery have barely moved as markets weigh the blizzards in the East against high storage and production levels.
Colossal storms the last couple of weeks jolted monthly natural gas consumption for electric power generation an astonishing 8.4 percent over last month's forecast by the U.S. Energy Information Administration, breaking the sector's monthly consumption record. The record would have been even greater had power outages not dampened demand for both heating and power generation, the EIA stated Wednesday in its Short-Term Energy Outlook
All in all, the recent extreme weather has had a lighter impact on natural gas prices than predicted. Overall, natural gas in storage declined 191 Bcf last week to 2.215 Tcf, which is 8.4 percent above year-ago stocks and 5.4 percent above the five-year average, according to the EIA.
Stocks in the East were responsible for much of the storage draw, dropping 116 Bcf to 1.135 Tcf, almost identical to the five-year average. Meanwhile, inventories in the West dropped 15 Bcf last week to a total of 344 Bcf -- nearly 5 percent higher than this time last year and 21 percent higher than the five-year average of 284 Bcf.
What's ahead: EIA expects natural gas prices for the year at Henry Hub to average $5.37, or $1.42/MMBtu higher than the 2009 average of $3.95. Prices are projected to continue increasing in 2011, averaging $5.86/MMBtu. Low hydro conditions in the Northwest are expected to contribute to the boost.
El Niño is bringing drier weather to the Northwest, resulting in the lowest runoff forecast since 2001. Flows through The Dalles are estimated at 74 percent of the 30-year average, and have caused the Bonneville Power Administration to lower its net revenue forecast for the fiscal year to a loss of $6 million.
According to predictions, El Niño conditions are near maximum strength now and should weaken over the next few months. Across the U.S., models suggest warmer-than-average weather extending through late spring across the northern regions and cooler-than-average temperatures from New Mexico eastward. The rain that typically falls in the Pacific Northwest is still expected to find its way to Northern California.
Six-to-10-day forecasts predict warmer-than-usual weather to continue across the western half of the U.S., along with below-average precipitation. Southern California, Arizona and New Mexico are now 5 to 8 degrees below normal, though warmer weather should arrive next week. The Northwest is 1 to 6 degrees above normal, but wet weather, especially west of the Cascades, is on the way.
Finally, a note on the Palo Verde Nuclear Generating Station: It completed a record-breaking year, producing 30.6 billion kWh in 2009. According to Arizona Public Service, it is the only plant of any kind in the U.S. to generate 30 billion kWh in a single year, and last year was the fifth time it has surpassed that mark. A planned outage for the plant is scheduled for April 3 [Stacey Waterman-Hoey].
* 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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