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Western Price Survey

Week's End Edition
April 3, 2009
California Launches New Day-Ahead Market

Western power prices moved higher this week, adding about $6/MWh at some hubs. Natural gas prices, however, drew increases of less than 20 cents/MMBtu.

California re-launched "day ahead" electricity trading on Tuesday, nine years after the state energy crisis. Trading appeared to go smoothly.

The daily electricity auction breaks up the state into 3,000 different nodes to provide more transparent pricing and a view where future power plants and transmission lines will be needed. These nodes, which come with locational marginal prices (LMPs), are then aggregated into three trading hubs for North of Path 15, South of Path, and Zone at Path 26, which lies in Central California at the interconnection of the transmission systems of Pacific Gas & Electric and Southern California Edison.

Following the new market, the Intercontinental Exchange now separates prices for NP 15 and SP 15 into "EZ Gen" prices, which they call "quasi swaps," as the market is still debating how to treat these trades -- as physical power, pure swaps, or quasi-swaps.

ICE considers a separate subset of California prices -- the EZ Gen Day-Ahead Locational Marginal Prices (DA LMPs) -- to be true financial swaps for power.

Trades for Northwest hubs, however, are still for physical power.

This week, for NP 15 and SP 15, traders reported a drop in bilateral transactions while ICE recorded an uptick in true swaps, which traded multiples more in volume than the quasi-swap prices (see story at [16]).

In general, the financial swap prices for NP 15 and SP 15 fell within the range of the quasi-swap prices (see chart). However, ICE did not report any off-peak quasi-swaps for Friday.

Price volatility also seemed to be greatly diminished this week for the LMP prices, with high and low trades often falling within $1/MWh of each other.

In other Western hubs, Palo Verde peak prices rose over $2 since Monday to average $29.90/MWh, while off-peak trades picked up almost $6 to an average of $25.76.

Average daytime California-Oregon border prices climbed $3 to $29.23/MWh. Nighttime values rose $6 to an average of $28.11/MWh.

The Mid-Columbia hub saw prime and off prime values settle at an average of $27.77/MWh, up more than $5 and $8, respectively.

Natural gas in storage nationwide remained flat last week at 1.654 Tcf, marking the start of the refill season, according to the U.S. Energy Information Administration. It will be the second highest level since March 1991.

Operators typically start injecting natural gas into salt caverns beginning on April 1 for the next winter. That typically lasts until Halloween. Compared to last year, natural gas storage is 32.1 percent higher, and against the five-year average it is 22.4 percent higher.

The West saw a meager 1 Bcf increase last week to 282 Bcf, pushing inventory levels 61.1 percent higher than last year and 39.6 percent above than the five-year average.

Natural gas prices across the country generally shrugged off cold weather, particularly in the Midwest, and followed the overall drop in futures prices.

The April natural gas contract expired last Friday, and lost about 10 percent during its month-long stint as the forward contract. It settled at $3.63/MMBtu, the lowest near-month contract closing in nearly seven years.

For longer-term futures, through April 2010, prices have dropped about 12 percent largely because of an abundance of natural gas in storage, slack industrial demand and continued economic weakness.

California power demand slumped from 29,200 MW on Monday to 28,900 MW Wednesday, the California Independent System Operator said. Usage perked up by 100 MW, but was expected to decline to 27,400 MW this weekend. On Monday, Diablo Canyon's 1,138 MW Unit No. 1 returned to full power after refueling and the replacement of its four steam generators [Kristina Shevory].

Western Electricity Prices
Week's End: March 30 - April 3, 2009
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 27.78-774.13 13.40-70
Mid-Columbia 21.25-29.50 18-29
COB 25.50-31.75 21-29.50
NP 15 EZ Gen 27-35 19.25-24.50
SP 15 EZ Gen 27.25-34 17.75-23
NP 15 DA LMP 28-31.90 18.50-24.75
SP 15 DA LMP 27.50-31.50 17.75-23.75
Palo Verde 26.25-33 17.25-28

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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