Western Price Survey
Week's End Edition
Western power prices continued to trade within narrow margins this week. The highest prices for electricity occurred Tuesday at California's North of Path 15, with peak-period trades topping out at $46.40/MWh. South of Path 15 trailed very slightly at $46.25.
Northwest hubs reached their peak values for the week on Tuesday as well, though at prices of about a dollar per megawatt-hour lower than California. The high mark at the California-Oregon Border was $45.25/MWh and Mid-Columbia was $45/MWh.
Palo Verde trailed other hubs at $43.50/MWh, revealing less than a $3 spread between high prices across the West.
Off-peak power tended to trade a bit above $35/MWh at most Western hubs this week, with the high mark of $40.75 set Thursday at Mid-C.
Average natural gas prices tapered off during the week as well, ending the week Friday about 20 cents/MMBtu lower than Tuesday's highs in almost all Western hubs (see chart).
Natural gas continues to experience rapid withdrawals in the eastern two-thirds of the country as cold weather lingers. The eastern and southern regions of the U.S. have finally dropped below their five-year average storage levels. However, the western region, at 22 percent above the five-year average, is high enough to keep the national storage levels just over the norm.
In the West, 1,853 Bcf remained in storage as of last Friday, according to the U.S. Energy Information Administration. The region is still 56 Bcf above the five-year average, even after an 11 Bcf withdrawal last week.
The Northeast is being pounded by heavy snow and strong winds expected to last through Monday, bringing scattered power outages across the region and as much as 16 inches of snow to New York City. A separate system will hit Florida and the Gulf region with heavy rain and even snow over the weekend.
Meanwhile, another vigorous storm is expected to hit the West on Saturday, bringing rain and snow from the coast to the western Rockies. This system is expected to hit hardest from the southern Sierras to Los Angeles, bringing one to three inches of rain and increased potential for mudslides, along with a foot of snow at higher elevations.
What's ahead: While the storm fades across the West Coast Sunday night, a new storm will gain momentum for Tuesday.
Meanwhile, the National Weather Service forecast over the next six to 10 days predicts above-average temperatures across eastern Idaho, Montana and northern Wyoming. The remainder of the West will returns to normal temperatures. Southern Oregon through the California coast continues to expect above-average rainfall, while the interior West should still see dryer-than-average conditions for this time of year.
Western power markets may have dodged one bullet this winter, though a larger concern still lingers. The slow economy and mild temperatures have dampened electricity demand, just as the Northwest River Forecast Center, once again, released data this week lowering the runoff projections to 69 percent of average at The Dalles Dam in Oregon. If these above-average temperatures carry through to summer and the economy picks up speed, demand could grow rapidly, which might spell trouble for power markets during the summer cooling season, especially in California and the Southwest.
Under normal hydro conditions, surplus power from the Northwest is shipped south to help meet those summer demand peaks. But if little excess hydro is available, other resources will have to pick up the slack.
The good news for power markets is that the high levels of natural gas supplies across the West could come to the rescue as competition for this increasingly scarce hydro resource intensifies, especially if we see a hot summer [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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