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Western Price Survey

May 2, 2008
Power Prices Cool Down on Milder Weather, Lower Natural Gas Prices

Electricity prices took a spill this week on easing temperatures, falling demand and wilting natural gas values.

Scorching temperatures Monday boosted demand on the California grid to 35,900 MW. Cooler temperatures arrived Tuesday and shaved demand to 31,800 MW and below 30,000 MW on Wednesday. But a warm front changed that pattern and sent demand past 30,000 MW the rest of the week. Power needs are expected to remain high through the weekend.

Cool winds from the Pacific will lower temperatures in Southern California into the low 70s this weekend. San Francisco will see warmer weather, with temperatures hitting 70 degrees on Sunday. Rain will torment Portland and Seattle through Saturday, but high pressure over the Rockies Sunday will give residents sunny skies and push temperatures into the high 60s, according to AccuWeather.

The California-Oregon border saw average peak prices descend from $95.26 Monday to $84.98/MWh by Friday. Average values for nighttime deliveries were rocky this week and finally ended up a little over $2 at $74.14/MWh.

Daytime prices at the Mid-Columbia trading hub fell $13 this week to an average close of $79.02/MWh. Nighttime trades came in Friday around $73.05/MWh, down $4 from Monday.

North of Path 15 peak values tumbled from an average of $102.84 to $89.17/MWh on Friday. Off-peak prices inched up nearly $2 to $76.64/MWh. South of Path 15 prices were nearly identical.

At Palo Verde, daytime power gave back $16 to end the week at an average of $80.82/MWh. Average off-peak trades Friday were down $3 to $68.24/MWh.

The spring rains weren't enough to erase the effects of two dry years in California, and state water levels remain 10 percent below average, according to the California Department of Water Resources.

Despite lower water levels, California is expected to have enough power to keep air conditioners humming, the California Independent System Operator said in its summer forecast (see story at [15]) [Kristina Shevory].

Natural Gas Slumps on Lower Oil Prices, Boost in Supplies

Tumbling crude prices and a large spike in natural gas supplies helped lower natural gas prices this week. Average prices ranged from $8.63/MMBtu at San Juan to $10.25/MMBtu at Pacific Gas & Electric's CityGate, and were down between 80 cents and $1.20 by the end of the week.

Oil prices also fell this week after the Federal Reserve signaled it may be done slashing interest rates, and the U.S. dollar rose. A better-than-expected manufacturing report and investors fleeing commodities for the stock market also helped draw down prices.

Although gas prices lost ground this week, they are unlikely to drop much in the coming months. Prices for forward contracts remain high on the New York Mercantile Exchange, with July and August natural gas trading for around $10.98/MMBtu and September-through-November contracts selling for above $11/MMBtu.

Imports of liquefied natural gas have been sharply lower than last year because shipments are getting diverted to Europe and Asia where prices are higher, according to the U.S. Energy Information Administration. One of the largest natural gas production facilities in the Gulf of Mexico has also been shuttered for over three weeks and won't resume production until the first half of May, the EIA said.

Stockpiles of natural gas posted their largest increase this year, rising 86 Bcf last week to 1.371 Tcf, the EIA said in its weekly storage report.

Mild weather and little demand for space heating and power generation boosted storage and left it nearly even with the five-year average and 16 percent below last year's level.

In the Western U.S., supplies inched up by 7 Bcf to 188 Bcf. Inventory levels are about 28 percent below last year and 14 percent less than the five-year average [K. S.].

Western Electricity Prices
Week's End: April 28 - May 2, 2008
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 30.70 - 490.84 19.03 - 142.03
Mid-Columbia 75.25 - 95 66.50 - 82
COB 78.50 - 98.25 68.50 - 79.50
NP 15 84.50 - 104.50 70 - 81
SP 15 82.50 - 104.50 71 - 81.25
Palo Verde 76 - 101 64 - 75

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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