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Western Price Survey

Week's End Edition
May 8, 2009
Power Values Move Higher With Heat, Natural Gas Prices

Electricity prices climbed on the back of dry, warm weather and an uptick in natural gas prices. The gains were largest in California and the Southwest where temperatures are warmer.

Spot natural gas prices at some major Western hubs shot up around 20 percent this week -- gaining around 75 cents/MMBtu in some areas -- and hit a high of $4/MMBtu at Pacific Gas & Electric's CityGate. On Nymex, Henry Hub natural gas for June delivery finished the week trading at $4.34 MMBtu.

Initial jobless claims plunged to their lowest level in three months and companies laid off fewer people than analysts had expected, leading to a surge in optimism, the U.S. Labor Department said. Still, it appears commodities traders could be selectively looking at positive news -- unemployment, for instance, climbed to 8.9 percent last month, a 25-year-high, the Labor Department said.

Regional factors also influenced prices. The return of warm, dry air along the West Coast pushed power usage higher this week. Since Thursday, Phoenix has been baking in triple digit temperatures and will stay that way through Tuesday. Closer to the coast, San Francisco is expected to see 70-degree temperatures early next week while Los Angeles approaches 80.

California average daytime prices rose $9 for the week to close around $39/MWh at North of Path 15 and South of Path 15. Average nighttime trades closed out the week $6 higher at $27.22/MWh in the north, and $9 greater to $28.35 in the south.

Average Palo Verde peak prices skyrocketed $12 to $40.93/MWh, and off-peak values zoomed up $11 to $29.37.

High winds from the Santa Ynez Mountains turned a brush fire in the hills above Santa Barbara, Calif., into a massive wildfire on Wednesday afternoon that has burned 3,500 acres, destroyed 75 homes, and forced around 20,000 people to evacuate, the California Department of Forestry and Fire Protection said. Only 10 percent of the fire has been contained. More gusty winds, hitting speeds between 30 to 50 mph, and coming from different directions are expected through Saturday, AccuWeather said.

No major high-voltage transmission power lines have been harmed by the wildfires, according to Cal-ISO. However, distribution lines near the fires may be affected. There are 400 homes and businesses without power since Wednesday evening, according to Southern California Edison, after the fire knocked out a transformer.

Demand for power steadily rose through the week, from 29,700 MW on Monday to 33,400 MW on Thursday, according to the California Independent System Operator. Usage was projected to creep down from 33,200 MW on Friday to 28,800 on Sunday.

At the California-Oregon border, peak prices increased nearly $4 to $31.24/MWh, while off-peak values added $4 to $25.19.

Prime trades at the Mid-Columbia rose almost $4 to $28.99/MWh. Off prime values settled at $24.96/MWh, up $5.

Last week natural gas had its highest weekly storage injection thus far this season, the Energy Information Administration said. For the week ending May 1, natural gas in storage skyrocketed 95 Bcf to 1.91 Tcf, placing inventories 34.4 percent above last year, and 23.3 percent above the five-year average.

Although heating and cooling demand are expectedly low, the storage increases have been larger than normal. Since April 1, injections of natural gas into storage have been 31 percent, or 264 Bcf, higher than last year.

In the West, storage gained 11 Bcf to 319 Bcf, and levels now stand 62.8 percent higher than last year and 39.9 percent greater than the five-year average.

The Columbia Generating Station was at 87 percent capacity today as the plant gradually powers down for the replacement of one third of its reactor core's fuel assembly. The entire fuel assembly must be swapped out every six years, and one third is replaced every two years. Repairs at the 1,150 MW unit are expected to begin on Saturday. The Palo Verde nuclear plant's third unit, which can produce up to 1,336 MW, has been offline since early April for planned maintenance and will return to full power later this month [Kristina Shevory].

Western Electricity Prices
Week's End: May 4 - 8, 2009
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 15.18-55.62 12-38.46
Mid-Columbia 23.50-30 17.50-25.50
COB 27-31.90 19.25-25.75
NP 15* 30-40.25 20-28.50
SP 15* 29-40.25 18.50-29
Palo Verde 27-44 17-30

* 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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