Western Price Survey
Week's End Edition
The high price for peak and off-peak power traded at the California-Oregon border jumped $4.75 to $47 per MWh on Thursday this week. Elsewhere trading continued to stay within the same fairly narrow range we've seen the past few weeks.
The Mid-Columbia and North of Path 15 hubs ended the week slightly higher than they started for both high and average prices while the southern hub of Palo Verde ended the week down slightly by both measures. Off-peak highs increased across the West on Friday with the largest changes visible in the southern markets.
Natural gas prices are on the decline again this week, partly because of subsiding winter weather in the East but also in response to recent reports increas-ing estimates of domestic reserves (U.S. Energy In-formation Administration, Navigant).
Unconventional gas fields in Appalachia and Lou-isiana are largely responsible for these reserve in-creases -- one shale play in Haynesville, LA was "virtually unknown in 2008 but could prove to be one of the biggest gas basins in the world" Navigant noted in a natural gas report this week. However, Enerfax reported that some caution is in order while the U.S. Environmental Protection Agency investigates the potential for ground and surface water contamination from drilling techniques used to extract this gas.
A continued rise in natural gas imports is also dampening prices. Canadian imports rose 10 percent from Feb. 25 to March 3 compared with the same Wednesday-to-Wednesday week last year (for the week ending Wednesday). Liquefied natural gas im-ports also continue to increase.
Natural gas stocks in the West were at 54 billion cubic feet Bcf after a drawdown of 15 Bcf last week, the EIA reported. Stored gas in the west remains 22.3 percent above the five-year average and 1 Bcf above this time last year.
Across the country, national storage levels are 1.2 Bcf above the five-year average, largely because of the high quantity of gas in the West. The producing regions of the Gulf Coast and South Central states are down 18 percent from this time last year and are 4 percent below their five-year averages.
EIA released its Natural Gas Annual with data for 2008 this week. One item of note was that 2008 showed the highest marketed production of natural gas since 1974, reaching 21.2 trillion cubic feet.
What's ahead: Temperatures across the West are forecast to be below average in most areas, according to the National Weather Service's six-to-ten day outlook. The northern half of Washington, Idaho and Montana are expected to stay in the normal range for this time of year but moving south, the temperatures becomes increasingly colder than average. The Four Corners region, including all of New Mexico, is well below average.
According to the outlook, precipitation is predicted to be above normal along the Oregon and Northern California coasts and below normal in Western Montana and the Mexico border region from Arizona to Texas [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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