Western Price Survey
May 9, 2008
Wholesale electricity prices this week resisted the historic gallop of crude-oil prices and remained nearly static in California, with average increases ranging from $1 to $3/MWh for peak power. Off-peak electricity in the Northwest, meanwhile, took a dive.
Weather patterns continue to call for highs of 70-80 degrees Fahrenheit in Southern California and 60-70 in Northern California, Oregon, and Washington, with low to zero precipitation. And demand on the grid, which hit a high of 30,300 MW on Wednesday, was forecast to reach only 29,816 MW on Friday.
The price of a barrel of crude is still breaking records. Oil surpassed the $126 mark Friday before retreating to $125.96. Yet natural gas futures did not rise in tandem, meaning oil's ascent did not likely affect electricity prices. The slight Friday bump in electricity prices in California likely had more to do with the usual higher demand scenario on Mondays.
Peak prices at South of Path 15 rebounded to a high of $93.50/MWh by the close of Friday's trading -- an average gain of less than $1. Off-peak power at the hub reached a summit of $75.75/MWh on Friday, yet the average price fell by around $1.
Prime power at North of Path 15 hit lows on Wednesday, going for $79.15 to $84/MWh, then rising Friday to trade between $86.50/MWh and $92.75. But night power could be had for a low of $67/MWh.
Palo Verde peak power ended the week trading for a high of $87/MWh, a little over a $3 gain on average from Monday. Both the high and low of the week were recorded for nighttime power on Friday, with a range of $62 to $70/MWh.
At the California-Oregon border, daytime prices regained losses and gained 10 cents on average, finishing the week at a high of $86/MWh. Off-peak power continued to tumble, however, swapping hands for between $53 and $67/MWh on Friday, the low range for the week.
Perhaps as a hint that cheap hydropower may have finally arrived, the Mid-Columbia hub offered the cheapest price of the week, with nighttime power dipping to a low of $44/MWh on Friday, down $22.75 from Monday's low price. Prime power trended downward through Thursday, before adding $6 on Friday to close at an average of $77.63/MWh [Ted Pelonis].
Natural Gas Falls Despite Crude
After increases early in the week, natural gas prices came down by week's end despite oil prices that soared throughout the week and found a crescendo on Friday. But at the same time, natural gas inventories ticked up and the weather remained mild.
According to the U.S. Energy Information Administration's weekly storage report, stockpiles of natural gas continued to increase, gaining 65 Bcf and ending the week at 1.435 Tcf. Even with the increase, storage levels are down 17 percent from a year ago, and 0.8 percent against the five-year average. In the West, inventories rose by 9 Bcf.
The EIA also reported that the Independence hub in the Gulf of Mexico is expected to be back on line by the middle of May. The mild weather could allow storage levels to be replenished.
Prices at the Southern California border, Permian and San Juan Basin hubs all reached highs on Tuesday, but then lost from 38 cents to 66 cents over the rest of the week.
California Border gas climbed to $10.35/MMBtu on Tuesday before tumbling to $9.66/MMBtu on Friday. At the Permian hub, prices rose to $9.83/MMBtu on Tuesday, shedding 46 cents over the next three days. Gas at the San Juan basin mirrored the other two, climbing to $9.59/MMBtu on Tuesday and ending 49 cents down on Friday.
Malin gas followed its own trajectory, hitting a high of $10.63/MMBtu on Thursday and again on Friday, a gain of 33 cents for the week.
This year, electricity prices are projected to rise 3.1 percent thanks to higher gas prices, the EIA said in its short-term energy outlook. Average spot prices for Henry Hub natural gas, considered the national benchmark, were $10.49/Mcf last month, 74 cents higher than in March. High crude prices, cooler weather, lower supplies and falling liquefied natural gas imports were the culprits behind rising gas prices. This summer, power prices could climb even higher than currently projected if temperatures spike [T. P.].
Archives of the Western Price Survey for the past year are also available online.
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