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Western Price Survey

Week's End Edition
March 16, 2007
Spring Fever Sends Wholesale Electricity Prices on Slide

Spot electricity prices at Western hubs continued to drop this week as mild spring temperatures brought lower demand for electricity and natural gas.

Oil prices also played a part in the price decline, as crude reached a six-week low with OPEC's announcement that it would not make a production cut, reportedly sending natural gas futures prices downward. Summer-like temperatures and low demand in the West also caused natural gas prices to lose more than $1 in value at some Western hubs between Thursday and Friday. Electricity prices largely followed the falling trend.

The earlier move this year to daylight-saving time, which began on Sunday, ended up pushing the peak load at the California Independent System Operator from 7 p.m. to 8 p.m. The Cal-ISO reported peak load so far this week of 32,481 MW on Monday, up 1,000 MW from last Monday's peak.

In California, peak power at North of Path 15 and South of Path 15 hit a high of 57 mills/kWh Monday, but by Friday had dropped to a low of 48.50 mills/kWh. Nighttime power, at approximately 43 mills/kWh Monday, dropped to a nadir of 34.50 mills at SP15 on Wednesday, but in Friday trading both hubs saw prices at about 41 mills/kWh.

High-demand power at Palo Verde, around 52 mills/kWh Monday, slipped to around 47 mills/kWh for deliveries this Monday. Off-peak power, after going as low as 32 mills/kWh Wednesday, sprang back to around 39 mills/kWh in Friday trading.

Farther north, at Mid-Columbia, peak power had been trading around 44 mills/kWh at the start of the week. But for Monday deliveries the commodity was priced between 32 mills and 36 mills/kWh. Meanwhile, Mid-C off-peak power went on a Friday fire sale: it could be found for 28 mills/kWh for Monday deliveries.

Daytime power at the California-Oregon border, at around 50 mills/kWh Monday, traded most of the week around 42 mills. Low-demand power was around 34 mills/kWh today, a drop of 6 mills from early-week values.

As for what's ahead, Malin, Ore., which had relentless snow at the end of February, is at a high of 74 degrees Fahrenheit today, but highs are expected to drop to around 56 on Monday. California will largely keep its warm trend: San Francisco, at a high of 75 today, is expected to be at a high of 67 Monday, while Los Angeles highs should remain in the low 70s [Chris Raphael].

Natural Gas Prices in West Go Into Free-Fall With Warm Weather

The U.S. Energy Information Administration Thursday reported that 115 Bcf of natural gas was removed from storage for the week ending March 8. Some 92 Bcf was removed from the East, 22 Bcf from producing states, but the warmer West took out only 1 Bcf.

While stocks are more than 300 Bcf below year-ago levels, they still remain more than 11 percent above the five-year average. Western natural gas prices initially shot up Thursday on the storage news, but made a dramatic decline on Friday.

Permian Basin natural gas, which had traded at a high of $6.28/MMBtu on Thursday, fell between $5.16 and $5.65/MMBtu for Saturday deliveries. But the most dramatic drop was for San Juan Basin gas, which was at $6.14/MMBtu Thursday but fell to around $5 the very next day.

Southern California border gas traded broadly today between $5.10 and $5.75/MMBtu, though it has gone as high as $6.48/MMBtu the previous day. Malin gas dropped to between $6 and $6.29/MMBtu today, approximately 25c shy of Thursday values.

In a short-term energy outlook released in early March, the U.S. Department of Energy said that drilling for natural gas is expected to reach historically high levels in 2007, as production rises by 2.4 percent. Liquefied natural gas imports are expected to increase from 580 Bcf to 770 Bcf this year.

Residential consumption of natural gas, however, is expected to rise by 14 percent in 2007 compared to last year.

The report stated that electricity consumption should maintain its normal annual growth rate of 2 percent [C. R.].

Western Electricity Prices
Week's End: March 12 - 16, 2007
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 29.52-354.88 9.09-146.40
Mid-Columbia 31-45.50 28-38.50
COB 41-52 32-41
NP 15 48.50-57 35-43.25
SP 15 48-57 34.50-43.15
Palo Verde 46-54 31.80-39.25

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.

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

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