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Western Price Survey

Week's End Edition
March 21, 2008
Power Prices Suffer Smackdown in Economic Royal Rumble

Electricity prices were hammered this week by a mad rush away from commodities, a short trading week, static demand and mild weather.

Wholesale power was pummeled by as much as $22/MWh by the close of trading Thursday. All the hubs ended the week lower than where they started, with peak prices ranging from the high $60s to low $70s. Off-peak electricity was in the high $50s to low $60s.

Lower demand for a holiday weekend and a resumption of power on some major transmission lines in the West also contributed to lower prices. On the California grid, power demand remained around 28,000 MW.

Meanwhile, temperatures this weekend in Southern California are expected to hover in the mid- to low 70s, and Northern California will even see some of the same warmth. The Pacific Northwest will get a break from a long string of Pacific storms. Temperatures will be in the low to mid-50s in Portland and Seattle.

Because the energy markets are closed for Good Friday, power for Wednesday and Thursday deliveries traded on Tuesday. Electricity for Friday traded on Wednesday.

Power prices skyrocketed on Tuesday after the Federal Reserve slashed interest rates and commodities jumped, including for natural gas and crude oil. The next two days, however, power prices slumped on a stronger dollar, lower commodities, and slack weekend demand.

As the dollar rose, speculators bailed out of commodities, which are often used as a hedge against inflation. Some analysts now wonder if the bull charge on commodities is over because a recession would shave demand for all types of energy.

At the California Oregon border, average peak prices hit a high of $84.56/MWh Tuesday before slumping Thursday to $68.90. Off-peak prices also rose Tuesday to $76.57 before finishing the week at $62.94.

Daytime power at the Mid-Columbia hub hit an average of $75.48/MWh Tuesday, then slipped $9. Nighttime electricity lost $6 this week to close at $63.19.

The highest price for average peak trades was $100.91/MWh at North of Path 15 on Tuesday, but it did not last long. By Thursday, prices fell in step with other hubs, closing at $74.65. Off-peak dipped from Monday's $73.19 to $62.78/MWh Thursday.

South of Path 15 daytime electricity fell $13 from the start of the week to settle at an average of $73.43/MWh. Nighttime power shed $2 to around $59.38.

Palo Verde peak power dipped $13 to about $65.69/MWh, while off-peak electricity finished the week at an average of $52.83, down $5 [Kristina Shevory].

Natural Gas Values Deflate

Natural gas prices took a note this week from falling crude prices, warmer temperatures and credit-markets chaos and slid around $1 at each of the major trading hubs.

Prices ended the week between an average of $7.32/MMBtu at San Juan and $8.60/MMBtu at Pacific Gas & Electric's CityGate.

A flurry of economic activity helped clip natural gas prices this week. Most notably, investors bailed out of commodities, including natural gas futures and crude oil, as the dollar gained strength and recession concerns abounded.

Gas prices even slumped despite dwindling storage. Colder weather in the Northeast and Midwest pushed down national supplies of natural gas last week by 85 Bcf to 1.313 Tcf, the U.S. Energy Information Administration reported. Storage is now at its lowest level since April 2005.

Currently, supplies are 14 percent below last year and 2 percent above the five-year average. With only two weeks left in the winter heating season, the agency estimates natural gas in storage will not slip below the five-year average.

In the West, mild weather pushed stockpiles up by 3 Bcf to 183 Bcf, keeping stocks about 20 percent less than last year, and 9 percent lower than the five-year average [K. S.].

Western Electricity Prices
Week's End: March 17 - 21, 2008
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 45.28 - 181 50.50 - 96.24
Mid-Columbia 64.75 - 79 59.50 - 78
COB 67.50 - 85.50 61 - 80.50
NP 15 72 - 104 59.25 - 82
SP 15 69.50 - 89.25 57 - 66.50
Palo Verde 60 - 82 51 - 59.25

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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