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Western Price Survey

Week's End Edition
April 13, 2012
San Onofre Outage Pressures Power Prices; Natural Gas Keeps Sliding

The average for Henry Hub spot natural gas reached its lowest mark since September 2009, ending trading April 13 at $1.86/MMBtu.

Market fundamentals continue hammering prices lower. Working gas in storage reached 2,487 Bcf as of April 6, according to U.S. Energy Information Administration estimates, a net increase of 8 Bcf from the previous week. Current storage levels are now 55.5 percent higher than a year ago and 58.7 percent above the five-year average.

Natural gas production cuts to date have failed to stop the price slide. "So far, the lower rig count has not impacted production levels, partly reflecting improved drilling efficiency," the EIA noted in its April 10 Short-Term Energy Outlook.

The agency also adjusted this year's estimate for average Henry Hub prices, moving it down 21 percent from last month's estimate of $2.51/MMBtu. The estimate for 2013 Henry Hub prices was also lowered, to $3.40/MMBtu.

In the April 6 to April 13 trading period, natural gas prices at Western hubs lost value, with Malin and Ruby-Malin losing 24 cents to an average of $1.81/MMBtu Friday. Southern California Border gas lost a nickel to trade at $2.20/MMBtu. PG&E CityGate spot natural gas eroded 10 cents, ending at $2.35/MMBtu. Natural gas trading volumes in the first quarter of 2012 rose by 30 percent, the result of traders trying different strategies to capitalize on falling prices, The Wall Street Journal reported.

Western daytime electricity prices were mixed between April 5 and April 13. Markets were closed April 6 for holiday observances. Northwest hubs lost about three dollars on average, while California hubs gained almost $2, save for Palo Verde daytime average power, which was down around $1.50 to $21.10/MWh. Prices at the close of the trading period ranged from averages of $15.05/MWh (Mid-Columbia) to about $29.45 (South of Path 15).

Prices at SP15 have historically been a few dollars higher than at other Western hubs, but the hub may also be experiencing additional pressure due to the continued outage of the San Onofre Nuclear Generating Station. SP15 peak prices this week hit a high of $34.75, which was $10 more than the North of Path 15 price and more than $13 above the highest price at Palo Verde, where Unit 3 at the Palo Verde nuclear plant remains offline for refueling and maintenance. Last year at this time, with both SONGS units operating, SP 15 prices were $2 above Palo Verde prices and $5 above NP 15.

Nighttime power in the West failed to recover from hydro-generation-prompted lows, and finished the trading week in the range of about $6.25/MWh at California-Oregon Border to almost $21/MWh at SP15. Northwest hubs dropped about $4 over the trading period, while California off-peak power lost around a dollar (see table).

Peak use on the Cal-ISO grid reached 28,708 MW Monday evening, which was the week's high. Northwest Power Pool reported a peak use of 48,669 MW Thursday evening.

What's ahead: April showers continue in the Pacific Northwest next week. California should be sunny, with San Francisco-area temperatures in the 60s through Thursday and Los Angeles daytime highs in the 70s [Linda Dailey Paulson].


Western Electricity Prices
Week's End: April 9 - 13, 2012
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 12.76 - 902 10.64 - 98.48
Mid-Columbia 11 - 18.25 (-)0.75 - 6.25
COB 13 - 21.50 0.75 - 8.75
NP 15* 22 - 24.75 15.50 - 16.50
SP 15* 24.50 - 34.75 17 - 22.25
Palo Verde 20.25 - 21.50 14 - 17.35

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

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