Western Price Survey
March 17, 2006
After trading for electricity on the Western spot market was completed for the week, probably the most salient thing that could be said about the activity was that it did not amount to much. Despite some minor movement at midweek, the cost of day-ahead power in the West was anything but volatile.
In California electricity markets, South of Path 15 peak-time deliveries cost between 50.50 mills and 52.75 mills/KWh at the start of the week. The price inched upward during the week and managed to close at a high of 54.50 mills/KWh on Friday. Off-peak power at SP15 opened on Monday moving for between 39 mills and 41.25 mills/KWh. Nighttime values lost a little steam going into the middle of the week, but rebounded during Friday's trading session.
Up in the northern half of the state, daytime power costs ranged from a low of 50.25 mills/KWh on Monday to a high of 53 mills/KWh on Tuesday. Little change in weather or power-supply availability kept price movement at a minimum, and Friday's range came in at between 52.25 mills and 53.50 mills/KWh. The price of off-peak power north of Path 15 topped out at 47 mills/KWh on Friday after spending much of the week in the range of 39 mills to 41 mills/KWh.
Mid-Columbia power cost between 45.50 mills and 47 mills/KWh for daytime deliveries on Monday and came close to replicating that spread during the rest of the week. A high of 47 mills/KWh was recorded at the hub on Friday. Nighttime power outdrew peak-time power at the end of the week, changing hands for 47.25 mills/KWh. During the first part of the week the price of off-peak power at Mid-C ranged from 44 mills to 45.50 mills/KWh.
California-Oregon border peak-time power values stayed just below the 50 mills mark this week until Friday, when trading for next Monday's deliveries boosted the price to 50.50 mills/KWh. A low of 43.50 mills/KWh was recorded on Tuesday for off-peak power, but the commodity traded more consistently for between 44 mills and 45 mills/KWh this week.
Palo Verde peak-time power moved for between 47 mills and 49 mills/KWh at the start of the week, and showed no signs of going anywhere else fast during the rest of the week. Only on Friday did the cost bump up to 51 mills/KWh, partly in response to another derate at the Palo Verde nuclear power plant. Unit No. 1, which has been hovering at 25 percent for some time, dropped to 20 percent of its full output at the end of the week. Off-peak power at PV attracted a low of 32.50 mills/KWh at midweek, but the price swelled on Friday, when trading closed at between 42 mills and 43.25 mills/KWh [Shauna O'Donnell].
Abundance of Stored Gas Not Always a Good Thing
It seems certain not only that what goes up must come down, but that what goes in must also come out. The current 1.83 Bcf of natural gas in underground storage facilities in the continental United States--an astonishing 60 percent above the five-year average--will need to be reduced in order to prepare for the next injection season. Just where it will go or how it will be consumed in the waning days of cold weather is the dilemma.
According to information presented to the Federal Energy Regulatory Commission by agency staff this week, the unprecedented mild winter has created a situation whereby the surplus of gas in storage could have a negative effect on the physical integrity of the underground facilities. Alas, the abundance of stored gas is not likely to put downward pressure on the retail price, staff added. The stored gas was purchased at higher wholesale prices than are currently being seen in the spot market, and it is those prices that will be reflected in retail rates.
Despite the overall low spot price for wholesale gas--even lower than at this time last year--prices took a bit of an upward trajectory this week, mostly in response to a surge in oil costs.
Permian Basin gas opened the week trading for between $5.75 and $5.88/MMBtu, but by Friday had risen as high as $6.14/MMBtu. The Southern California border price at Topock also swelled as the week wore on. From a low of $5.96/MMBtu recorded on Monday, the price for Topock deliveries rose to a high of $6.36/MMBtu by week's end. PG&E CityGate gas spent all week in the $6 range, topping out at $6.70/MMBtu on both Thursday and Friday [S. O'D.].
Archives of the Western Price Survey for the past year are also available online.
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