Western Price Survey
Week's End Edition
Mild weather brought down demand for power this week on the West Coast and moved wholesale values at all the key trading hubs lower. But on Friday, a higher temperature and demand scenario for Monday deliveries lifted prices somewhat, though some energy markets lacked enough juice to break past start-of-the-week levels.
Overall, skyrocketing crude and natural gas futures, which both set records this week, helped prop up power prices again. Sour economic news, including soaring interest rates, a sluggish dollar and resurgent inflation, also didn't hurt. Neither did continued withdrawals of natural gas from storage.
A leftover storm from earlier this week in the Pacific Northwest will keep temperatures cooler than usual there. And California won't be able to escape soggy cool weather as the jet stream moves southward, AccuWeather reported. Slightly below-normal temperatures are predicted for Los Angeles and San Francisco this weekend.
As cooler weather took hold, the California Independent System Operator reported demand from just below 30,000 MW at the start of the week, when warmer temperatures prevailed, to around 28,000 MW by Friday.
However, warmer temperatures should arrive Monday, with highs predicted above 60 in San Francisco and 70 in Sacramento. Wholesale power hit a high of $99.50/MWh at North of Path 15 Friday, the highest price at any of the Western energy markets.
California-Oregon border peak values were largely shot down this week, but squeaked out a meager increase to an average of $84.48/MWh, which ended the week just 48 cents more than Monday's start. Nighttime power was the same, losing ground through Thursday before gaining about $4 Friday to end the week up at $77.30/MWh.
Peak prices slipped all week from Monday's average of $78 at the Mid-Columbia hub, but regained about half the loss Friday for an average of $75.51/MWh. Off-peak also swooned for most of the week, recovering enough on Friday to settle at $73.97/MWh, up 89 cents over Monday.
Daytime power at South of Path 15 hit a high of $91.85/MWh Tuesday and then retreated to end the week at an average of $85.39/MWh. Nighttime power was in a free fall this week, but managed to pick up some traction Friday, rising $7 to an average of $66.33/MWh.
Peak Palo Verde electricity fell $4 through the week to $72.17/MWh on Thursday and then rose $4. Off-peak ended the week more than $1 below Monday at an average of $66.33/MWh [Kristina Shevory].
Crude, Economy Weigh on Gas
While natural gas prices took a slight breather this week in the West, national prices continued to set new records. Henry Hub prices reached a new two-year high Thursday, fueled by soaring crude prices and another round of frigid weather next week in the Northeast and Midwest. Prices closed at $10.23/MMBtu, besting the January 2006 record of $10.19.
In the West, average prices hit highs on Tuesday, then generally shrank through the rest of the week. Prices ranged from an average of $8.61/MMBtu for Permian gas to $9.88/MMBtu on Friday at Pacific Gas & Electric's CityGate.
Energy has become a safe harbor as short traders have plowed their money into the sector in expectation of additional price increases. Commodities, unlike stocks, are seen as a safe investment because demand for energy is expected to continue rising. Crude-oil prices clinched another record high Thursday, topping $110.33 per barrel for April crude.
Although the supply report, released the same day, gave additional support for rising prices, it came in generally as expected. Natural gas supplies sank by 86 Bcf last week, pushing national storage levels to 1.398 Tcf, the U.S. Energy Information Administration reported. The drop left supplies nearly 10 percent below last year and whittled down the five-year average surplus. In the West, natural gas slipped 9 Bcf to 180 Bcf and left stockpiles around 20 percent less than last year [K. S.].
Archives of the Western Price Survey for the past year are also available online.
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