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Western Price Survey

March 4, 2011
Power Prices Lack Reasons to Climb

Excess hydropower in the Pacific Northwest and lax demand throughout the West continue to depress spot power prices.

Peak electricity use on the Cal-ISO grid reached 30,165 MW Tuesday, the week's high, and use is not expected to exceed 29,520 MW in the week ahead. Meanwhile, the Bonneville Power Administration reported hydro-generation output reaching 14,550 MW and wind-generation peaks of around 2,900 MW this week. BPA loads, meanwhile, have continued falling, peaking around 8,575 MW Tuesday, March 1, versus closing in on 10,000 MW in the prior week.

Here's how average daytime power prices fared in the Friday-to-Friday trading period spanning Feb. 25 to March 4:

  • California-Oregon Border: Down $8 to around $26.25/MWh.
  • Mid-Columbia: Down $6.85 to $24.10/MWh.
  • North of Path 15 and South of Path 15: Both down around $3 to $32-$33/MWh on average.
  • Palo Verde: Finished at $28.60/MWh, a loss of $3.85.

Nighttime power prices also lost value during the trading period, with Mid-C dropping to a low of $8/MWh on Thursday but recovering a bit by Friday.

Western natural gas values also eroded. By Friday, March 4, Southern California Border gas lost 19 cents over the previous Friday to close at $3.70/MMBtu.

The U.S. Energy Information Administration noted in its March 2 report that the March futures contract expired at $3.79/MMBtu, a 12 percent decline for the contract's tenure. April futures traded for $3.80 on Friday, March 4

Although recent Western natural gas prices have been affected by weather, other factors could come into play in the long term, said Gordon Pickering, director of fuels analytics at Navigant Consulting. The Rockies Express (REX) pipeline will continue to provide capacity to move gas east, but shale-gas production from the Marcellus formation could mean that any REX expansion could start moving gas west, Pickering said. Meanwhile, the Ruby pipeline, on track to be completed in June 2011, will serve to move additional gas supply from the Rocky Mountains to Malin.

Pickering added that diminishing Canadian gas deliverability in Alberta and growing demand from domestic Alberta oil sands have affected Canadian gas-price competitiveness in California and the Pacific Northwest. However, rapidly expanding British Columbia shale-gas production may reach Western markets over the next several years in Alberta, as well as markets in the Pacific Northwest and possibly into California. Meanwhile, natural gas exports to China and other Pacific Rim nations may be enabled by new LNG liquefaction-terminal capacity to be developed in British Columbia.

What's ahead: The Pacific Northwest may have a respite from rain with a brief dry period Monday and Tuesday in Seattle. After rain late Sunday, the San Francisco area should have dry, mild weather for a short period starting Tuesday, March 8. The greater Los Angeles area, meanwhile, has a possibility of rain Monday, but conditions should be clear and dry through most of the week, with a high of 71 °F expected Wednesday [Linda Dailey Paulson].

Western Electricity Prices
Week's End: Feb. 28 - March 4, 2011
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 25.48-835.39 15.89-83.53
Mid-Columbia 15.75-32.50 8-22
COB 22-35 12-22.25
NP 15* 29-35.90 23.75-23.75
SP 15* 29.60-35.75 15.75-24.25
Palo Verde 21.50-33.50 13-23.75

* 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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