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Western Price Survey

Week's End Edition
April 10, 2009
Holiday Weekend, Drooping Natural Gas Prices Push Power Prices Down

Western electricity prices steadily dropped throughout the shortened trading week, closing Thursday as much as $9 below the start of the week.

Spot natural gas prices in the West also dipped, shedding from 20 to 30 cents/MMBtu. The holiday weekend and an expected drop in electricity demand were largely behind the slump in power prices.

At major Western trading hubs, natural gas prices ranged from $2.72/MMBtu at San Juan to $3.50/MMBtu at Pacific Gas & Electric's CityGate.

The markets are closed today in observance of Good Friday. Regular trading resumes on Monday.

The shorter week meant power for Friday through Monday traded on Thursday. Typically, traders don't like to make huge bets before a holiday weekend because of the uncertainty of major events occurring over the weekend.

Peak power at the California-Oregon border shed more than $4 to average $24.94/MWh. Average off-peak trades were off $7 to $18.96/MWh.

Prime Mid-Columbia values closed down $6 to an average of $21.14/MWh. Off-prime values shot down $9 to average $16.89/MWh.

Average daytime Palo Verde power slipped $4 to $26.91/MWh, while nighttime trades inched down a little over $1 to $18.75/MWh.

Peak prices declined $4 to average $29.43/MWh at North of Path 15 (for day-ahead locational marginal prices) and $28.01/MWh for South of Path 15. Off-peak values dipped 52 cents to $22.66/MWh in the north and nearly $1 to $21.15/MWh in the south.

California is just weeks into its new electricity trading market. The Intercontinental Exchanges now separates NP15 and SP15 prices into EZ Gen day-ahead LMPs, or financial swaps, and EZ Gen hub prices, called quasi-swaps.

Falling industrial and consumer demand for natural gas, combined with plenty of gas in storage, have kept natural gas prices low. Since touching a high of $13.31/MMBtu last July, Nymex Henry Hub natural gas futures have fallen to $3.61/MMBtu on Thursday.

Natural gas in storage rose by 20 Bcf to 1.674 Tcf nationwide last week, according to the U.S. Energy Information Administration, making it the third week in a row for injections. Natural gas supplies are 35.4 percent higher than in the same period last year, and 22.7 percent more than the five-year average.

In the West, supplies inched up by 1 Bcf to 283 Bcf, leaving supplies 63.6 percent greater than last year, and 39.4 percent above the five-year average.

The number of natural gas rigs in operation continued to drop. For the week ended April 9, 790 rigs were drilling, down 18 from last week, according to Houston oil-field services firm Baker Hughes Inc. There are 54 percent fewer rigs drilling for natural gas compared with the same period last year. As demand has slumped, energy companies have trimmed the number of natural gas rigs from a September peak of 1,606.

Based on Nymex forward prices, traders expect higher natural gas prices later in the year as fewer rigs drill for gas. June-through-October delivery contracts, for example, are trading higher than May trades, with Thursday closing prices ranging from $3.74/MMBtu to $4.22/MMBtu, respectively.

Power demand in the Golden State slumped from 29,300 MW on Monday to 28,400 MW by Thursday, according to the California Independent System Operator, and was projected to touch 27,000 MW on Friday. This weekend, usage will bob around 25,000 MW.

The Palo Verde Nuclear Generating Station in Arizona has its third unit off line for scheduled maintenance until mid- to late May. The 1,336 MW unit was shut down on Saturday.

Looking ahead: Colorado State University hurricane forecasters expect an average season this year. So far they are predicting only 12 named storms and six hurricanes for the June-November storm season, thanks to cool sea-surface temperatures and a weak El Niño. Only two will develop into major hurricanes with winds of 111 mph or higher, the forecasters said [Kristina Shevory].

Western Electricity Prices
Week's End: April 6 - 10, 2009
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 7.85-132.98 8.84-35.78
Mid-Columbia 19.50-28.50 15.25-26.50
COB 24-30.25 18.50-26
NP 15* 27.75-34.25 20.40-23.75
SP 15* 26.55-33.30 19.25-22.75
Palo Verde 26.25-32 17.75-21

* 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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