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Western Price Survey

Week's End Edition
Febuary 20, 2009
Power Prices Battered by Holiday, Natural Gas

Electricity prices lost more than $7 at some major Western trading hubs this week following the Monday President's Day holiday, calm weather and flat natural gas prices.

Spot trades for natural gas fell about 40 cents/MMBtu on average at some Western hubs, on the heels of weak crude oil prices and milder temperatures across the nation.

But even when temperatures have been cold, natural gas prices have largely remained flat because demand has sagged and there are brimming supplies of natural gas in storage.

On Tuesday, natural gas for March delivery hit a two-and-a-half-year low of $4.20/Mcf, before touching a six-year low of $4.07/Mcf on Thursday.

Last week the U.S. Energy Information Administration reported that natural gas in storage fell by 24 Bcf -- matching the smallest withdrawal in February since 1994, when figures were first tracked, the EIA said. The East Coast also recorded its smallest withdrawal ever, likely courtesy of warmer-than-normal temperatures.

At 1.996 Tcf, working natural gas in storage is 9.7 percent greater than a year ago and 8.4 percent higher than the five-year average. Western storage dipped by 15 Bcf to 312 Bcf, leaving inventory levels at an astounding 44.4 percent higher than last year and 28.4 percent higher than the five-year average.

California average daytime electricity prices shed over $4 since Monday to $35/MWh at North of Path 15 and South of Path 15. Average nighttime trades shed over $2 to $28.54/MWh at both hubs.

Palo Verde peak prices lost over $2 to average $30.24/MWh. Off-peak trades were down $3 to $24.67.

The West Coast has been dry and cool the past few days but rain is back in the forecast for San Francisco, and is expected to arrive in the region tonight and stay through the weekend. Temperatures will fall from the low 60s to the high 50s by Sunday. Los Angeles has a slight chance of rain on Sunday, with temperatures in the 70s. Phoenix will be sunny, with temperatures in the mid- to upper-70s.

Demand for power in California rose to 30,700 MW on Tuesday, but fell to 29,900 MW on Wednesday and 29,400 MW on Thursday, according to the California Independent System Operator. For Friday, usage is expected to inch up to 29,700 MW and remain at that level through the weekend.

The Northwest is expected to get hit with rain this weekend, with temperatures in Portland dipping from the high 50s on Friday to the high 40s by Sunday. Seattle will see constant temperatures in the low 50s.

At the California-Oregon border, peak electricity prices fell to an average of $35.82/MWh, down $5. Average off-peak prices lost $7 to $29.85.

The Mid-Columbia border saw prime trades dip over $2 to average $36.43/MWh, while off-prime values plunged over $7 to $29.68/MWh.

According to the Federal Energy Regulatory Commission, Western bilateral electricity prices for peak power fell below an average of $50/MWh for all trading hubs in January versus a range of $60-$80/MWh in January of 2008. Over the past year, electricity prices peaked near $150/MWh at South of Path 15 and Palo Verde in July of 2008 but have fallen steadily since.

California hydroelectricity production remains low and the recent rains are not expected to rid the state of a drought this summer. According to FERC, California's five-year average hydro production varied in the range of 40,000 MWh to 80,000 MWh during winter months. January 2009 production was below 40,000 MWh, though it is reaching towards that level in February.

After seven weeks of maintenance and shutdown, the San Onofre Nuclear Generating Station's 1,070 MW first unit resumed operation on Thursday. On Tuesday, the Columbia Generating Station in Washington State, which can produce up to 1,150 MW, returned to full power after a week of downtime while hydraulic lines were refilled and a valve was replaced. Diablo Canyon's 1,138 MW first unit remains offline for refueling and the replacement of steam generators, a process expected to take several months [Kristina Shevory].

Western Electricity Prices
Week's End: February 16 - 20, 2009
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 14.42-276.37 20.37-247.51
Mid-Columbia 32-43.50 27.25-40.50
COB 33.75-44 28-39.50
NP 15 32.75-41.75 27-32
SP 15 32.50-41.25 26.25-31.50
Palo Verde 29.25-34 22-28

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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