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Western Price Survey

Week's End Edition
May 4, 2012
Divergent Hydro Supplies, Nuke Outages Complicate Summer Forecast

Bountiful hydro generation in the Pacific Northwest should result in sufficient regional power supplies this summer, but the picture is not as clear for California, which had little precipitation over the winter.

The Bonneville Power Administration has curtailed 20,604 MWh of wind generation to date thanks to plentiful hydro, with the latest reduction of 1,068 MWh in the early morning of May 2.

Oversupply conditions in 2011 spanned from May 18 to July 10, with 97,557 MWh of renewables generation curtailed.

BPA spokesman Michael Hansen says it's impossible to predict whether 2012's oversupply period will be on a par with 2011 because conditions are different. For example, the 1,150 MW Columbia Generating Station is operational this year, but was off line last year from roughly April through September. There's also an additional 1,000 MW of wind on the system this year.

To cope with the high-water, high-wind season, Columbia reduced its output to 85 percent as of Monday, April 30, and is scheduled to operate at that level until May 7, though that may be extended. Hansen said 85 percent is the lowest generation level possible that maintains grid reliability.

Meanwhile, California may have too little water available as the summer approaches. As of May 1, 2012, the statewide snowpack water content was 40 percentof average, compared to 185 percent of normal recorded last May.

Golden State reservoirs are currently 110 percent of average, says Maury Roos, chief hydrologist with the state's Department of Water Resources. But much of the water is from last year's snowpack. As a result, "We expect below-average hydro production," he said.

"The real question is, 'Will the state weather this year well?'" posits Roos. "What kind of reserves should the operators keep in case this year is dry?"

Cal-ISO's summer forecast deemed water levels "currently not of concern because of above average precipitation in previous winter seasons," but the forecast also derated hydro production this year by 1,137 MW.

Complicating matters is the ongoing outage of the San Onofre Nuclear Generating Station, which has been undergoing inspection of its steam-generator tubes since January. It is unknown if the plant will return to service this summer. Southern California Edison said this week it is drafting a plan to bring back SONGS this summer, while Cal-ISO is preparing contingency plans, such as restarting Huntington Beach natural gas units.

For now, Western power prices remain low from the spring runoff (see table). Compared to last week, however, California-Oregon Border peak power gained about $7.15 to average $18.60/MWh.

For off-peak power, hubs traded in a range of about $2.95/MWh to $19.95/MWh Friday, with Mid-C recording a low price of -$3.75/MWh during the Friday-to-Friday trading period.

Working gas in storage reached 2,576 Bcf as of Friday, April 27, according to U.S. Energy Information Administration estimates. Storage levels are now 48.4 percent higher than a year ago and 49.9 percent above the five-year average. Western natural gas spot prices nonetheless managed to rise, with PG&E CityGate up 24 cents to an average of $2.54/MMBtu and Southern California Border gas up 14 cents to $2.23 [Linda Dailey Paulson].

Western Electricity Prices
Week's End: April 30 - May 4, 2012
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 11.18-99.25 9.72-24.82
Mid-Columbia 1.50-15.50 (-)3.75-4.50
COB 9-19.25 (-)0.50-7.75
NP 15* 22-25 12.50-14
SP 15* 25.75-30 14-20
Palo Verde 20-26.50 12.25-18.50

* 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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