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Western Price Survey

Week's End Edition
March 9, 2012
Power Prices Follow Natural Gas Lower

With robust storage and warmer weather continuing to suppress natural gas prices, Western power prices also dropped a few dollars in Friday-to-Friday trading.

Working gas in storage reached 2,433 Bcf as of Friday, March 2, according to U.S. Energy Information Administration estimates, a net decrease of 80 Bcf from the previous week. Current storage levels are now 43.6 percent higher than a year ago and 48.3 percent greater than the five-year average.

"The inventory data came as a disappointment for traders who were betting the market had bottomed," noted Enerfax in its Friday report. The publication added that natural gas prices could continue sliding as the heating season closes and warm weather is expected throughout the eastern U.S. and chunks of the Midwest.

The Henry Hub spot average price lost 17 cents since last Friday, ending at $2.20/MMBtu. According to EIA data, the last time the average spot price for natural gas at this hub was this low was in September of 2009, when prices bottomed at $1.83/MMBtu.

In the West, PG&E CityGate and Malin spot natural gas each dropped 18 cents over the Friday-to-Friday period, ending at $2.42 and $2.10/MMBtu, respectively. Ruby-Malin dropped 17 cents to $2.11/MMBtu, while Southern California Border gas prices lost 16 cents to $2.21.

Electricity prices mirrored the decline in natural gas values. Western average peak-power prices dropped between $2.30 and about $3 from Friday to Friday, led by Mid-Columbia, which ended at about $19.15/MWh Friday. Average prices at close of trading ranged from $19.15/MWh (Mid-C) to about $24.25 (South of Path 15).

Meanwhile, average nighttime spot prices ranged between $16/MWh (Mid-C) and $20.70/MWh (California-Oregon Border) during the trading period. Mid-C off-peak spot power lost about $4.10 over the trading period, ending at about $16/MWh.

Peak use on the Cal-ISO grid reached 30,151 MW Tuesday evening, although the grid operator expected that Friday, March 9 demand could surpass that figure by 300 MW. Northwest Power Pool demand reached its high point of 55,957 MW of peak demand on Wednesday.

What's ahead: Colder air pushes into the Seattle area Monday, bringing a rain-snow mix to the area. Rain continues into Thursday with mostly cloudy, cooler-than-normal temperatures. Portland expects similar conditions with temperatures in the 40s Monday through Thursday.

One of these weather systems should reach the Bay Area by Tuesday, bringing much-needed rain to the region, though meteorologists did not mention how much rain they expect. Rain isn't expected to extend south of Fresno County or Santa Barbara County, although some meteorologists remain optimistic that Southern California may have some rainfall March 16.

As of Feb. 28, California's Department of Water Resources reported that snowpack water content is only 30 percent of historic readings. "The weather news so far this winter has not been good," said DWR Director Mark Cowin.

"We still have good reservoir storage from last winter's storms," he said, "but we would like to see more rain and snow" [Linda Dailey Paulson].

Western Electricity Prices
Week's End: March 5 - 9, 2012
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 12.15-178 12.21-28.50
Mid-Columbia 17.50-23.25 12-21
COB 21-24 16.25-22
NP 15* 24.25-25.25 17.75-20.50
SP 15* 23-27 17.50-20
Palo Verde 21-23.75 16.75-19

* 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.

The Western Price Survey is excerpted from Energy NewsData's comprehensive regional news services. See for yourself how NewsData reporters put events in an accurate and meaningful context -- request a sample of either or both California Energy Markets and Clearing Up.

Please contact with questions or comments about this site.

Contact Chris Raphael, editor with questions regarding Price Survey Content.

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