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Western Price Survey

Week's End Edition
April 2, 2010
Power Prices Suffer; Natural Gas Traders Lock In Long-Term Low Prices

Heading into the Easter weekend, Western spot power prices generally declined, with the top price for peak power at $45/MWh at South of Path 15 on Monday. At the Mid-Columbia hub, peak prices rose to $42/MWh Wednesday before ending the week Thursday at $39.50. It was a short trading week due to the Good Friday holiday (see chart).

Prices for peak power at the California-Oregon border hit a high of $42/MWh this week, down 75 cents over last week's high mark. North of Path 15 daytime electricity was also lower this week with a high mark of $41.25, down $2.50 from the high point last week.

January set a record for the highest average daily natural gas consumption in any month on record, according to the U.S. Energy Information Administration's Natural Gas Monthly report.

Natural gas futures markets showed some volatility this week, which is likely due to short-covering by investors. Futures prices for the year are down about 32 percent as storage continues to build, spring looms, and shale gas production abounds, according to Enerfax. Prices for May deliveries closed Wednesday at $3.87/MMBtu, but rose to around $4 Thursday. Natural gas storage is likely to be even stronger in May. For the week ending March 26, the EIA reported 1.638 Tcf of natural gas in storage, an increase of 12 Bcf from the week prior. Western inventories grew by 4 Bcf, putting storage in the West at 2.5 percent above last year's levels and 27.9 percent above the five-year average.

However, analysts from Exxon Mobil, Goldman Sachs and Conoco Phillips are predicting increases in natural gas prices as a result of economic growth, demand for cleaner fuels and higher coal prices. Goldman Sachs expects gas prices to increase to $6/MMBtu in 12 months, up more than 50 percent from today's prices, according to Enerfax. Analysts are reporting increases in long-term contracts as purchasers are locking in current low prices and offering some stability to suppliers.

According to EIA, crude oil continues to trade in the opposite direction of natural gas. WTI crude traded Thursday at $83 per barrel, its highest level in 18 months.

What's ahead: Bonneville Power Administration's latest power operations report states that streamflows at The Dalles Dam in Oregon during the first three weeks of March were barely above the "critical year" natural streamflow. Bonneville does not sell power when streamflows fall below the critical level. The National Oceanic and Atmospheric Administration is still predicting that Dalles output will be at 65 percent of normal through the summer.

Seattle and Portland can expect clouds and rain next week with temperatures in the mid-50s. San Francisco will be a little warmer and should see temperatures in the low to mid-60s all week and mostly sunny skies. The six-to-10-day forecast by NOAA's Climate Prediction Center reports below-average temperatures and above-average precipitation along the coastal regions of Washington, Oregon and Northern California. Weather elsewhere will be in the normal range for this time of year [Stacey Waterman-Hoey].

Western Electricity Prices
Week's End: March 29 - April 2, 2010
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 15.80-67.82 11.09-30.54
Mid-Columbia 36.60-42 29-35
COB 38.50-42 31-34.50
NP 15* 38.50-41.25 29-31.75
SP 15* 39.75-45 27.75-32.25
Palo Verde 34-39 24-28

* 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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