Western Price Survey
Week's End Edition
Western wholesale power values gained all week and surged on Friday, but the price climb had little to do with anything happening in the West.
Along the California coast and in much of the Central Valley, temperatures surfed in the 60s and 70s and, as expected, demand on the grid fell. Peak demand, as reported by the California Independent System Operator, was 30,235 MW on Monday. The mark dropped steadily below 30,000 MW most of the week, bumped a bit back up Thursday, then dropped again Friday. Through it all, electricity prices just kept inflating.
Electricity values seemed more influenced by a natural gas arc this week. Natural gas values at crucial hubs that serve the state, such as the Permian and San Juan basins, gained on average 50 cents/MMBtu or more for the week. Southern California border gas, for instance, which traded Monday for an average of $8.80/MMBtu, finished the week at an average of $9.34/MMBtu.
A few factors are toying with gas prices. For starters, parts of the Midwest are still freezing, with the Dallas-Fort Worth area getting snow this week. Moreover, federal weather forecasters are calling for colder-than-normal temperatures in the Northeast and Midwest for the next few weeks. Meanwhile, storage levels have fallen below that of last year, so traders are concerned about an impending gas shortage, all before the nation waves arrivederci to winter and that cheap spring runoff arrives.
Crude oil has also been rattling commodities markets. Crude retreated below the $100 mark Tuesday, but then came the OPEC announcement that it would not boost production. Crude then jumped to $104.55 Wednesday, beat $106 on Thursday and finished the week slightly above $105.
As oil and natural gas went, so did power prices. North of Path 15 peak, which traded tightly around $78/MWh Monday, gained steadily throughout the week and jumped to a high of $98 on Friday -- the highest value of any Western hub this week. Nighttime deliveries gained more than $13 from Monday, finishing at around $75.16.
Prime power for South of Path 15 briefly jumped to a high of $97 Friday, gaining on average around $8. Low-demand electricity picked up a lucky $13, finishing around $75.
Palo Verde nighttime power set the lowest mark among Western hubs this week, $56.50 on Monday. By Friday, however, the average value had gained around $12.
Mid-Columbia peak, which traded below $70 on Monday, went for an average of $78 Friday. Off-peak power shot up around $13 for the week to an average of $76 on Friday.
Monthly electricity prices so far this year are, on average, exceeding the values set in January and February of 2007, according to Federal Energy Regulatory Commission data. See: www.ferc.gov/market-oversight/mkt-electric/california/elec-ca-wc-pr.pdf [Chris Raphael].
Gas Storage Drawdown, Cold Weather Give Traders Jitters
When it's snowing in Texas, can that ever be good for California power prices?
Western natural gas prices ballooned this week as a storage removal, cold Midwest weather and high oil prices shook the markets.
The U.S. Energy Information Administration reported Thursday that storage declined approximately 135 Bcf last week, which was less than expected. Traders, however, are reportedly expecting a similar storage withdrawal next week with a forecast for even colder weather in the Northeast and Midwest through March 15.
Last week the East took out 92 Bcf. The West removed 7 Bcf and producing states 37 Bcf.
Total storage levels of 1.484 Tcf are 169 Bcf less than a year ago, but 4.4 percent above the five-year average.
San Juan Basin gas jumped from around $8.44/MMBtu to over $9 on Friday. Permian Basin gas moved from an average of $8.53 on Monday to $9.14 on Friday [C. R.].
Archives of the Western Price Survey for the past year are also available online.
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