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Western Price Survey

March 10, 2006
Prices Perk Up a Bit at Week's End; Sempra's Nevada Coal Plant May Be DOA

Peak power in Southern California opened the week trading for between 45.50 mills and 51.25 mills/KWh. The price bumped up as high as 53 mills/KWh at the end of the week. Off-peak power south of Path 15 attracted between 34.50 mills and 41.25 mills/KWh much of the week before hitting a high of 46 mills/KWh on Friday.

In the North of Path 15 region, peak-time deliveries moved for a low of 44 mills/KWh on Monday. The price slowly gained and closed Friday between 48 mills and 51.75 mills/KWh. At midweek the cost of off-peak power bottomed out at 35.25 mills/KWh, but a drop in the temperature and a hike in the price of gas sent the price up to a range of 41 mills to 46 mills/KWh on Friday.

Up in the Northwest, Mid-Columbia power cost between 40 mills and 43 mills/KWh during Monday's trading session. The price scooted upward and closed out the week at a high of 47.50 mills/KWh. Off-peak power changed hands at Mid-C for a low of 39 mills/KWh at the beginning of the week. By midweek the price had moved up to a high of 44 mills/KWh and in Friday's session managed to overtake the price of peak power, closing at 47.7 5 mills/KWh.

Daytime packages delivered to the Palo Verde hub attracted between 46 mills and 49 mills/KWh at the start of the week, losing a mill or two in value as the week wore on. Nighttime power at the hub moved for as little as 31.50 mills/KWh early in the week, but by Friday was trading for between 39.50 mills and 43 mills/KWh.

Sempra Energy confirmed this week that it asked the Bureau of Land Management to suspend analysis of the Granite Fox coal-fired power station for three to six months.

Jon Wellinghoff, an attorney with the Nevada Clean Energy Coalition, said he believed the project was dead. He has spearheaded opposition.

"That's his speculation," said Art Larson, a spokesperson for Sempra Energy.

"We're in the evaluation process on this. There is really nothing new."

Last week, Sempra said it was reconsidering the size of the project for the second time. The project originally was proposed to generate 1,450 MW, but the company reduced the size to 1,200 MW in November.

Larson said the company has not announced any long-term contracts for power generated from Granite Fox. Sempra generally does announce those contracts, he said.

Sempra was planning to sell the power to buyers in Nevada and California, Larson said. State regulations now restrict California utilities from entering long-term power-purchase contracts with conventional coal-fired plants, however. In Nevada, the market potential is shrinking because Nevada Power and Sierra Pacific Power have announced their intention to build a coal-fired power plant at Ely, he added [Shauna O'Donnell and John Edwards].

Farewell to Thoughts of Double-Digit Winter Gas Prices

With the quantity of natural gas in underground storage sitting at more than 50 percent above the five-year average and winter on the wane, forecasts of double-digit wholesale prices can officially be put to rest. Gas flowing into California this week was well ensconced in the mid-to-high $5 range, even lower than last week's prices.

The Northern California delivery point of Malin saw gas move through for a low of $5.65/MMBtu on Tuesday, while a high of $5.85/MMBtu was recorded at the hub on Friday. Gas flowing into the state at the Southern California border at Topock opened the week costing between $5.59 and $5.76/MMBtu before gaining another dime on Tuesday for a high of $5.875/MMBtu.

Southern California Edison announced this week that it will issue requests for offers in April for longer term natural gas supply contracts and financial hedge products.

As stated in a March 8 news release, Edison will solicit contracts of up to 59 months and will seek bids for its tolling generation agreements, it new Mountainview power plant, and qualifying facilities contracts.

The company will also seek bids for California Department of Water Resources' tolling contracts which are managed by Edison. Bids for these indentures would be implemented through contracts with DWR.

Edison will solicit proposals from liquefied natural gas facilities and new pipeline capacity in addition to other new infrastructure projects.

Edison is encouraging upcoming participants to contact the company and begin preparation of enabling and credit agreements. These agreements are necessary for an RFO award and Edison anticipates the approaching RFO process to happen rather quickly.

Interested suppliers are encouraged to review Edison and DWR's standard enabling agreements and credit support agreements for natural gas products and financial derivatives.

Questions are currently being accepted at GasRFO@sce.com. All other procedural information including transaction-specific terms and conditions will be available in April

In other gas-market news, a report prepared for the attorneys general of four Midwestern states concludes that the nation's wholesale natural gas markets are largely dysfunctional and the volatility in the price of the commodity has far more to do with financial drivers than market fundamentals such as supply and demand. The report can be found on the Web sites of the AGs of Iowa, Illinois, Missouri and Wisconsin [Shauna O'Donnell and Samantha Yugler].

Western Electricity Prices
March 6 - 10, 2006
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 8.13-84 6.22-51.86
Mid-Columbia 40-47.50 39-47.75
COB 44-49 39-47.50
NP 15 44-51.75 35.25-46
SP 15 48.75-53.75 34.50-46.25
Palo Verde 45.50-49 31.50-43

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 webmaster@newsdata.com with questions or comments about this site.

Contact Shauna O'Donnell, editor with questions regarding Price Survey Content.

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