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Western Price Survey

Week's End Edition
March 28, 2008
Power Prices Climb on Souring Economy, Hike in Natural Gas Values

A flurry of bad economic news along with higher natural gas prices sent energy prices higher this week as traders girded for a recession.

Sales of new homes are at a 13-year low and new orders for long-term manufactured goods dropped for the second month in a row. The economy slowed in the fourth quarter, confirming the country is in for a period of lackluster or negative growth. Crude prices jumped on the news, and went even higher after a second bombing Thursday in the city of Basra, home to one of Iraq's three largest refineries. Although oil prices pulled back on Friday because the bombing was not as serious as first believed, crude still remains a safe haven for investors in a sour stock market and weak-dollar environment.

Cooler temperatures, which returned to California early in the week, were likely behind the fall in electricity usage. Demand for power on the California grid, despite soaring electricity prices, hit a high of 30,482 MW on Monday and slid below 30,000 MW on Thursday and Friday.

More cool weather, teamed with rain in the Pacific Northwest and Northern and Central California, is expected to keep temperatures below average, according to AccuWeather. Seattle and Portland will see temperatures in the low 50s thanks to yet another Pacific storm coming ashore. Only the Southwest will enjoy real warmth, with Phoenix temperatures in the mid-80s.

At the California-Oregon border, average peak prices added $12 to end at $85.08/MWh. Off-peak prices closed out the week $18 higher at an average of $80.50/MWh.

Average daytime power at the Mid-Columbia hub rose $11 to $80.76/MWh, while nighttime power soared $18 to $80.06/MWh.

North of Path 15 saw prime power prices jump $13 to an average of $92.21/MWh, and nighttime electricity skyrocket nearly $18 to $77.04.

Peak power prices at South of Path 15 moved $12 higher to an average of $91.71/MWh. Off-peak power shot up $19 to around $77.31.

Palo Verde daytime electricity climbed from a Monday average of $71.44/MWh to $82.77 on Friday. Nighttime power finished Friday trading at around $71.28/MWh, up about $19 [Kristina Shevory].

Natural Gas Rises on Drawdown

Natural gas prices were mixed this week, rising and falling on local heating demand and weather patterns. But a drawdown in stockpiles and forecasts of cooler weather gave some direction to prices on Thursday and sent them skyward. Average prices, which ranged from $8.25/MMBtu at San Juan to $9.66/MMBtu at PG&E's CityGate, gained 15 cents to 60 cents this week.

Natural gas storage across the country fell by 36 Bcf last week to 1.277 Tcf, leaving stockpiles nearly 16 percent below last year. The drawdown, however, was not large enough to force stockpiles below the five-year average. Storage now hovers about 3 percent above that average, the U.S. Energy Information Administration reported.

In the West, stocks dropped 7 Bcf to 176 Bcf and are now 25 percent below last year. There is 12 percent less stored natural gas than the five-year average, making the region the only one in the country below that level.

The Northwest and Northern California are expected to get colder-than-average weather over the next 10 days, according to the National Weather Service's outlook.

Last year, natural gas prices fell because of increased domestic production and liquefied natural gas imports, according to the EIA's annual natural gas report released this week. The average wellhead price was $6.34 Mcf, one cent cheaper than in 2006.

For the first time since 2004, natural gas consumption rose, the agency said, thanks to lower prices and increased domestic production and imports. Natural gas use climbed 6 percent to 23 Tcf on the back of more drilling in the Rocky Mountains and mid-continent [K. S.].

Western Electricity Prices
Week's End: March 24 - 28, 2008
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 50.96 - 910.42 23.09 - 488.11
Mid-Columbia 68.50 - 89.25 61.50 - 83.50
COB 73 - 86 60 - 82
NP 15 78 - 99.50 58.25 - 83.50
SP 15 77 - 100 57.75 - 83.75
Palo Verde 70.25 - 85 52.50 - 76

Archives of the Western Price Survey for the past year are also available online.


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Contact Chris Raphael, editor with questions regarding Price Survey Content.

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