Western Price Survey
Week's End Edition
A dry spring and summer in California may challenge power reliability if the state's hydro-generation potential is diminished, particularly with San Onofre Nuclear Generating Station still off line.
The California Department of Water Resources continues describing statewide conditions as dry. On March 12, no river included in the forecast update was flowing at over 45 percent of its monthly March average. Snow-water content is also about 60 percent of average for April 1 in northern and central areas, and 46 percent of average in the south.
Cal-ISO, in a briefing earlier this week, stated it expects below-average hydro generation this summer. It is deferring its summer assessment to May due to the "evolving hydro situation."
The agency reports its operating reserve margins for summer 2013 are healthy, although southern Orange County and San Diego power supplies remain a concern in light of the continuing SONGS outage.
Working gas in storage reached 2,378 Bcf as of Friday, March 15, according to U.S. Energy Information Administration estimates, a net decrease of 62 Bcf from the previous week. Storage levels are now 21.1 percent less than a year ago and 9.5 percent above the five-year average.
Henry Hub natural gas values gained 12 cents since last Friday, trading March 22 at $4.01/MMBtu. Western prices moved even higher, led by Ruby-Malin gas, which jumped 25 cents to about $4.05. Southern California Border rose 23 cents to $4.09 and PG&E CityGate jumped 15 cents to $4.27/MMBtu, the highest price among Western hubs.
Colder-than-normal U.S. weather increased natural gas demand and storage-withdrawal volumes. Recently, "many traders have bet that cold temperatures this winter, along with rising demand from businesses and utilities, finally have began to catch up with stagnant output," noted Enerfax in its March 22 report. More withdrawals are expected in the weeks ahead.
Western power prices generally responded similarly, with gains between $1.60 and almost $6 over the March 15 to March 22 trading period. South of Path 15, however, lost $4.50 on average, finishing March 22 at almost $56/MWh.
Here's how average peak prices at Western hubs fared since last Friday:
Off-peak prices jumped between $2.60 and about $9.95 in Friday-to-Friday trading. Prices on March 22 ranged from about $30.50/MWh at Palo Verde to $44.20/MWh at SP15.
Peak demand on the Cal-ISO grid reached 28,870 MW Wednesday, March 20. Northwest Power Pool peak demand reached 53,884 MW Monday.
What's ahead: Much of the West Coast will start the week sunny and dry, with cloudy, cooler conditions as the week progresses. Downtown Los Angeles expects a high of 73 °F Monday, March 25, falling to 67 °F Thursday. A chance of rain should return to San Francisco Tuesday night. Daytime highs will hover around the 60-degree mark into Thursday. The National Weather Service forecasts above-normal precipitation in California and Arizona March 29 through April 4 [Linda Dailey Paulson].
* 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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