Western Price Survey
February 23, 2018
Energy prices rocketed up this week, with Southern California CityGate natural gas values nearing $20/MMBtu and South of Path 15 peak power breaking the $100 mark thanks to cold weather throughout the West.
The region reached capacity on natural gas imports and, along with some transmission constraints, Southern California peaking units were forced to rely on gas sourced from the Aliso Canyon storage facility.
The region has roughly 2.8 Bcf of import capacity, noted Jeff Richter, principal with EnergyGPS. “When the need is 0.7 to 1 Bcf, anytime in that window, the math tells you you either have to withdraw from Aliso or match withdrawals,” he said.
Conditions were similar to those in October, when SoCal CityGate natural gas prices reached $12.57/MMBtu Oct. 23 due to weather-based demand and system constraints, according to Richter.
Southern California Gas Co. sendouts reached 3.87 Bcf Feb. 22, according to the U.S. Energy Information Administration. Withdrawals in the region were more than 0.9 Bcf for four consecutive days. The greatest withdrawal was 1.08 Bcf Feb. 20.
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To complicate matters, negative pricing in the region Feb. 18 meant the California Independent System Operator had to curtail 8,747 MWh of solar.
Power demand on the CAISO grid reached 30,070 MW Feb. 20, which was the week’s high. Total renewables generation reached 13,609 MW Feb. 22, while thermal reached 13,787 MW Feb. 20.
Meanwhile, working natural gas in storage was 1,760 Bcf as of Feb. 16, according to EIA estimates. This is a net decrease of 124 Bcf compared with the previous week.
Storage levels are now 25.7 percent less than a year ago and 19 percent less than the five-year average.
Henry Hub natural gas spot prices rose 11 cents in the Feb. 15 to 22 trading period, ending at $2.60/MMBtu.
The Southern California CityGate natural gas hub gained as much as $15.93 to reach $19.51/MMBtu during the trading period. It closed at $4.41/MMBtu, up 83 cents. The Thursday-to-Thursday gain was the greatest among Western hubs.
Peak power values in the West added between $12.15 and as much as $36.35 in trading. South of Path 15 experienced the wildest fluctuations. After jumping from $44.40/MWh to $112.90/MWh between Feb. 20 and 21, the hub ended at $74.10/MWh Feb. 22 and gained the most in trading.
Likewise, off-peak power values increased by between $11.55 and $35 in trading. Palo Verde gained the most, up $35 to $58.25/MWh by Feb. 22.
Looking ahead, the week of Feb. 26 “should be as tight as it is this week,” Richter said. –Linda Dailey Paulson.
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