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Western Price Survey

Week's End Edition
March 27, 2009
Power, Natural Gas Prices Poised for Continuing Slide

Daytime electricity prices lost ground this week as natural gas prices sagged and power demand ebbed away. Pleasant temperatures across much of the West Coast and Desert Southwest helped temper power usage. Nighttime prices were nearly static.

Western spot natural gas prices were flat or shed around 30 cents/MMBtu, ending the week around $3/MMBtu. Nymex natural gas futures prices for April delivery ended the week at $3.74/MMBtu, down from $4.29/MMBtu at the start of the week, as the winter heating season seemed to be drawing to a close.

Overall, compared to the same period last year, natural gas prices are about 50 percent lower. This week, natural gas prices had followed crude prices higher at midweek as market optimism rose over the potential for an economic rebound, but fell back by Thursday on a reported bump in natural gas storage. The stock market and commodities rallied earlier in the week after President Barack Obama released details of his bank bailout plan.

Last week, working natural gas in storage climbed by 3 Bcf, making it the first weekly addition this year, according to the U.S. Energy Information Administration. At 1.654 Tcf, stocks are 29 percent above last year and 20.4 percent above the five-year average.

The winter withdrawal season typically ranges from Nov. 1 to March 31, but inventory levels increased last week because of warmer-than-average weather across most of the country.

Natural gas storage inched up by 5 Bcf to 281 Bcf, and left supplies nearly 59 percent higher than last year and 39 percent greater than the five-year average.

Since July, when the front-month contract hit a high of $13.69/MMBtu, natural gas prices have shed more than 70 percent thanks largely to a falloff in demand from manufacturers and consumers, and a gas-drilling boom that is only now subsiding. It usually takes several months for energy companies to completely sideline projects when energy prices dip.

Still, since a peak in September, there are nearly 50 percent fewer natural gas drilling rigs in operation across the country, according to Baker Hughes, an oil-field services firm in Houston that tracks the drilling-rig markets. There were 810 rigs in operation as of last week, the lowest number in almost six years.

Over the week, peak electricity prices at the California-Oregon border were down nearly $3 to average $29/MWh Friday, while off-peak trades were off less than $1 at $25.62/MWh.

Average prime Mid-Columbia values lost $4 to settle at $26.03/MWh. Off-prime prices inched up 13 cents to an average of $25.83/MWh.

California average daytime prices dropped over $3 to $31.72/MWh at North of Path 15, and declined over $2 to $31.47/MWh at South of Path 15. Nighttime trades were up about 60 cents in the north at an average of $25.53/MWh, and up over $1 to $24.96/MWh in the south.

Palo Verde average peak prices logged a 40-cent increase to $31.09/MWh since Monday. Off-peak values closed up about $1 at an average of $26.16/MWh.

Electricity usage in California slipped from 29,000 MW on Monday to 28,700 MW by midweek, according to the California Independent System Operator. Usage perked up to 28,900 MW on Thursday, and was expected to remain at the same level on Friday before falling to 27,800 MW over the weekend.

On Friday, the first unit at the Palo Verde nuclear power plant was operating at 11 percent capacity as a clog in the 1,336 MW unit's cooling system was cleared. Diablo Canyon's first unit, meanwhile, came back on line on Tuesday and was at 52 percent capacity on Friday. The 1,138 MW unit had been shut off for two months while its four steam generators were replaced. The plant's second unit went through the same procedure last year [Kristina Shevory].

Western Electricity Prices
Week's End: March 23 - 27, 2009
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 23.39-108.93 19.01-52.40
Mid-Columbia 23-30.50 20-27.50
COB 27.50-32.25 23-27.25
NP 15 30-36 24-26.50
SP 15 30.25-34.50 22.50-25.50
Palo Verde 28.75-33 20-28

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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