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Western Price Survey

Week's End Edition
March 26, 2010
Power Prices Set for Lamb-Like Exit

Power markets are staying true to proverbs and appear to be leaving sheepishly this month as sluggish prices continue.

Average prices for peak power traded at the Mid-Columbia and Palo Verde hubs stayed under $40/MWh all week. Other Western hubs, mostly those serving California, hovered between $40 and $45/MWh. The highest price paid for peak power occurred Wednesday as South of Path 15 edged up to $46/MWh.

In addition to lower overall prices, trading also continued within a narrow price range. The difference between high and low prices stayed generally between $3 and $5 for both daytime and nighttime deliveries. The one exception was a $7 dip in off-peak deliveries at Palo Verde as prices got as low as $24/MWh both Wednesday and Thursday.

Demand for power in both California and the Northwest was down slightly over last week as the weather became increasingly mild across the West.

The high price for natural gas deliveries across all Western hubs dropped between 40 and 44 cents/MMBtu over last week's high prices. The biggest declines were in markets serving Southern California -- SoCal Border gas dropped below $4/MMBtu on average by Friday. Natural gas spot prices at Henry Hub hit a high for the week at $4.15/MMBtu on Tuesday.

The natural gas injection season is off to an early start in the West as stocks increased very slightly during the week ending March 19, according to the U.S. Energy Information Administration. Natural gas storage in the West is 25 percent above the five-year average.

According to the EIA, as natural gas prices continue to decline, crude oil prices are increasing, creating unusually large price differentials. In the past 10 years, the ratio of crude oil to natural gas prices, in dollars per MMBtu, has typically been no more than 2. Last fall the ratio briefly sprang up to 5, where it bounced around and then dropped to about 2.5 for the remainder of the year.

Since mid-February, national natural gas prices have dropped about 20 percent while crude oil has risen 8 percent. The ratio of oil to gas prices last week (ending March 19) has crept back up to 3.3. According to Enerfax, some observers have noted the shift from global oil producers to North American natural gas markets could be a sign that oil is increasingly difficult to find.

Natural gas futures are down 30 percent since January in response to mild weather and high volumes of gas available. The Nymex price for gas delivered in April ended Thursday at $3.87/MMBtu.

Next week's weather forecast for the Western region predicts temperatures cooler than normal and precipitation above normal. In spite of recent and forecast rain, the U.S. Drought Monitor reports persistent abnormally dry conditions across most of the West, with the exception of most of California. Areas described as in "severe drought" include the interior Northwest, the border area of Nevada, California and Oregon, and northern Arizona [Stacey Waterman-Hoey].

Western Electricity Prices
Week's End: March 22 - 26, 2010
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 9.13-148.30 8.09-28.35
Mid-Columbia 35.25-40.25 45.50-30
COB 38-42.75 27-30.50
NP 15* 39.75-43.75 24-31.50
SP 15* 36.50-41 24-31.50
Palo Verde 41.50-46 28-33.28

* 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.


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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