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Western Price Survey

Week's End Edition
March 30, 2012
Northwest Rain Boosts Hydro, Lowers Prices

The expectation of plentiful spring runoff with recent near-record precipitation is pushing Northwest off-peak power prices to severe lows. More rain is en route.

Bonneville Power Administration spokesman Mike Hansen reiterated that the recent uptick in hydro generation has more to do with "drafting" -- releasing water from reservoirs downstream in preparation for spring runoff -- than the generous rainfall.

In recent weeks the regional water-year forecast increased 10 percent, Hansen said. The water year should be 102 percent of normal.

"March has been a wet month across the Pacific Northwest and has caused water-supply forecasts to rise," noted Stephen King, senior hydrologist with the Northwest River Forecast Center. "Most of our forecasts are above normal at this point, but not as high as last year."

Adding to abundant hydro generation is "an awful lot of wind," Hansen said. That may require BPA to address oversupply conditions.

Nighttime power in the West traded in the range of $2.40/MWh to $18/MWh on March 30. Mid-Columbia off-peak at one point during the week traded for minus 50 cents/MWh. On average, Mid-C lost around $6/MWh compared with March 23, to finish at $2.40/MWh.

Over the trading period, California-Oregon Border off-peak prices dipped $7.35 to $4/MWh. Nighttime prices at NP15 and SP15 finished the week at $16 and $18/MWh, respectively.

Peak average Western electricity prices were mixed, but prices failed to move beyond a dollar in either direction. Prices at the close of the trading week ranged from averages of $16.30/MWh (Mid-C) to about $26.50 (SP15). Both units of the San Onofre Nuclear Generating Station remain off line following concern about wear on steam-generator tubes.

Meanwhile, both natural gas spot and futures prices kept falling on abundant storage. Working gas in storage reached 2,437 Bcf as of March 23, according to U.S. Energy Information Administration estimates, a net increase of 57 Bcf from the previous week. Current storage levels are now 50.3 percent higher than a year ago and 58.6 percent above the five-year average.

Henry Hub spot average prices lost 7 cents over the trading period, to $2/MMBtu. In the West, PG&E CityGate spot natural gas dropped 12 cents to $2.38/MMBtu; Malin lost 9 cents to $1.97, and Southern California Border gas prices posted a 7-cent loss to $2.12/MMBtu.

Natural gas futures reached a 10-year low this week, dropping to $2.149/MMBtu March 29 and $2.12 on March 30.

What's ahead: Showers are expected to persist throughout the Pacific Northwest, possibly through Friday, April 6. Flooding is anticipated throughout the region, particularly in the Cascades where melting snowpack at 5,000 to 7,000 feet is contributing to run-off totals. A cold front should bring a slight chance of rain to the San Francisco area midweek. Southern California should be sunny, with Santa Ana conditions anticipated Monday and Tuesday in Ventura and Los Angeles counties [Linda Dailey Paulson].

Western Electricity Prices
Week's End: March 26 - 30, 2012
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 12.96-204.96 10.91-27.01
Mid-Columbia 7-20 (-)0.50-5.75
COB 14.50-23 2.50-7.25
NP 15* 22-23.75 11.25-16.35
SP 15* 24.50-27 14.75-18.50
Palo Verde 20-22.50 14.25-17.25

* 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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