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Western Price Survey

Week's End Edition
Febuary 19, 2010
Western Power Prices Drop Slightly as Natural Gas Values Slide

Electricity prices across most of the West stayed within a tight range of about $3/MWh during a shortened trading week following the President's Day holiday.

The Southern California hubs varied from the other Western markets with average peak power prices dropping $6-$7 over the course of the week. Palo Verde started off Tuesday at a high of $48.25/MWh for peak power before coming down to an average of around $42/MWh by Friday.

The drops came even though trading on Friday is for deliveries of power on Monday, which tend to have higher demand patterns.

Prices at South of Path 15 followed a similar trajectory, starting the week at a high of $50.50/MWh before ending the week at an average of $44.

In the Northwest, the Bonneville Power Administration announced lower runoff projections for the Columbia River again on Friday. Flow through The Dalles Dam is now projected to be 71 percent of average through July and Lower Granite Dam on the Snake River is estimated at 62 percent of average.

The Cal-ISO demand forecast shows peak power remaining around 29,000 MW next week, with the high expected Monday at 29,500.

A quick look back at peak demand in California at this time last year revealed that this week is down about 13 percent compared with last year. The economic downturn surely is the primary culprit. Despite lower demand, energy prices are nonetheless higher -- average peak prices paid last year at this time in Southern California ranged from about $32.50 to $44. Last year's annual average bilateral prices were about $39/MWh in California hubs, though the five-year average is about $63, according to data maintained by FERC.

In natural gas markets, prices declined slowly but surely across the Western hubs, ending the week about 60 cents lower per million Btu (MMBtu) than when the week started. Tuesday started off with prices ranging from $5.30 to $5.66 MMBtu, but by Friday many hubs had slipped below $5. Henry Hub spot prices ended the week higher than Western hubs at an average price of $5.08/MMBtu, but were down about 50 cents/MMBtu for the week.

The U.S. Energy Information Administration reported on Wednesday that natural gas spot prices had declined in almost all locations across the lower 48 states. In the Northeast, prices came down after last week's run-up in response to extreme weather conditions.

EIA also reported that natural gas consumed for electric power generation rose 21 percent last week compared with the same period last year. Total U.S. natural gas demand for the week is also up 2.3 percent compared to the previous week and 24 percent compared to last year.

Natural gas stocks in the West were 52 Bcf above the five-year average after a net withdrawal of 22 Bcf last week.

What's ahead: Near-month contracts for gas delivered both in March and April increased 9 cents from Feb. 10 to Feb. 17, in spite of the expectation that natural gas in storage will remain above the five-year average through the end of the year.

By Friday, however, the March contract had slipped markedly to just about $5/MMBtu, as traders reportedly looked to spring weather and discounted futures contracts.

Areas east of the Cascades are experiencing high temperatures 6 to 12 degrees below normal, while west of the Cascades is seeing temperatures 8 to 11 degrees warmer. The California coast is the exception with weather just slightly cooler than average.

Above-average temperatures are expected to continue in the Northwest over the next week, and normal temperatures are forecast for the rest of the West. The East will continue to see temperatures 10 to 15 degrees below normal, indicating continued high levels of natural gas consumption across the region.

In other news, liquefied natural gas imports to the U.S. rose 29 percent (or 100 Bcf) in 2009 to a total of 452 Bcf, according to EIA reports. The exporting countries were Egypt, Trinidad and Tobago, Nigeria, Norway and Qatar [Stacey Waterman-Hoey].

Western Electricity Prices
Week's End: February 15 - 19, 2010
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 34.01-63.37 30.13-49.33
Mid-Columbia 39.50-44 36.50-39
COB 41.50-45.75 36.50-39.50
NP 15* 43.45-48.25 36.50-39.50
SP 15* 43.75-50.50 35.25-36
Palo Verde 41-48.25 32-36

* 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.

Please contact with questions or comments about this site.

Contact Chris Raphael, editor with questions regarding Price Survey Content.

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