Western Price Survey
Week's End Edition
Weak demand continued to dampen power prices across the West this week. As electricity and gas markets head into the shoulder months, prices at all Western hubs trended downward over last week.
The spread of high prices for peak power narrowed across Western hubs this week. Prices were within a $7/MWh margin Monday, but by Friday the range was only $3.25.
The highest prices this week for peak power were reported at South of Path 15 -- $50/MWh on Monday -- but the hub ended the week at an average of $41.83/MWh. Palo Verde was at the low end of the spectrum, ending the week at an average of $38.03.
Prices at all hubs dropped $3 to $6 per MWh on Thursday, with the largest declines coming from California, where prices were closing in on those at Northwest hubs.
The U.S. Energy Information Administration reported that natural gas prices continued to decline across the country for the week ending Wednesday. Spot prices fell between 1 percent and 6 percent as the weather improved and storage remained plentiful. Futures contracts for April delivery at Henry Hub fell Thursday to a six-month low of $4.09.
With only two weeks left in the traditional heating season, storage still relatively strong, production high and warmer weather arriving, prices will likely remain low.
EIA reported that natural gas prices at markets serving California showed some of the biggest declines since last week, yet still were some of the highest prices in the country. Generators in the West have been using more natural gas compared with the five-year average, likely in response to the reduction in hydropower from the Northwest. Another contributing factor is the continued outage of the 2,150 MW San Onofre Nuclear Generating Station, which has been out of full service since September 2009 for a steam-generator replacement.
Total demand for natural gas across the United States dropped 8.6 percent for the week ending March 17, compared with the previous week. Residential and commercial sector consumption fell 12 percent, corresponding to warming temperatures. Natural gas supply exceeded demand for three days during the report week for the first time since November last year.
Natural gas storage in the West was at 283 Bcf as of March 12, 23 percent above the five-year average.
Temperatures across the West are predicted to be warmer than average next week. Los Angeles should see temperatures in the low 70s; San Francisco is expected to be sunny and see mid-60s temperatures, while Portland should see temps in the upper 50s and Seattle the mid-50s. Light rain is predicted along the Northwest coast midweek, with more precipitation arriving Friday.
In other news, streamflow measured at The Dalles Dam on the Columbia River remains at 63 percent of normal for this time of year, indicating reduced hydropower generation available throughout the year [Stacey Waterman-Hoey].
* 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.
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