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Western Price Survey

Week's End Edition
May 11, 2007
Mini Heat Wave Brings Operations Warning, Drives Up Power Prices

Summer reared its hot head across the country this week, bringing to Southern California a mini heat wave that was still lingering in the Southwest desert. California temperatures reached the 90s this week.

Not surprisingly, demand surged, driving the California Independent System Operator to issue the year's first restricted-maintenance operations warning on Tuesday as system load peaked at 38,400 MW.

Loads eased with temperatures, and demand fell to 33,600 MW by Thursday. The Western Electricity Coordinating Council reported operating reserves of at least 10 percent all week for the entire region.

Nevertheless, California prices climbed in Friday trading even with temperature forecasts calling for not much above 70 degrees along the state's coast Monday. Daytime power at North of Path 15 traded as high as 82.75 mills/kWh on Monday. Lower temperatures and clouds for the lower-demand weekend brought peak power values down to 70 mills/kWh in Thursday trading before they hit the week's high of 89 mills/kWh on Friday. Nighttime power in the area traded in the mid- to upper 40s much of the week. The low off-peak price was 41.50 mills/kWh for Wednesday deliveries. By Friday, nighttime power hit 63 mills/kWh.

South of Path 15 was the warmest part of the state and is still seeing temperatures in the 90s in some areas. Daytime prices started high Monday -- reaching 83.50 mills/kWh -- bottomed at 69.25 mills/kWh Thursday, then hit 89 mills Friday. Nighttime power traded for a low of 41 mills/kWh Tuesday and climbed the rest of the week to a high of 63 mills/kWh for deliveries next Monday.

Palo Verde power prices reflected weather reports calling for temperatures in the triple digits or close to it in the Southwest desert through Monday. Peak power traded at a low Monday of 55 mills/kWh, stayed in the 60s midweek, then vaulted to 82.75 mills/kWh Friday. Off-peak power was cheap at 18 mills/kWh Monday before reaching 58.50 mills/kWh Friday.

At the California-Oregon border, peak prices tailed down most of the week as the weather eased. They ramped back up for higher-demand deliveries on Monday, when temperatures in the Portland area are expected to climb again. Daytime deliveries swung between 55 mills/kWh in Tuesday trading to as high as 74 mills/kWh on Friday. Nighttime deliveries followed a similar pattern, trading as low as 31.50 mills/kWh Monday and as high as 57.25 mills/kWh Friday.

Mid-Columbia high-demand prices started at a nadir of 35 mills/kWh on Monday and angled up all week. By Friday, daytime prices hit 66.50 mills/kWh. Nighttime power gained more than 30 mills this week, starting at 21 mills/kWh on Monday and fetching as much as 52 mills/kWh for Monday deliveries [Charles Redell].

Early Summer Weather on Both Coasts Drives Natural Gas Prices

Approximately 96 Bcf of natural gas went into storage last week, the U.S. Energy Information Administration reported on Thursday, but traders expected the injection. Prices were more affected by weather patterns this week.

At the Permian Basin in Texas, prices started out high Monday as the country eyed the subtropical storm brewing in the Atlantic. Prices reached $7.11/MMBtu on Monday. With one exception Thursday, values at the hub never reached $7 again and fell to a low of $6.75/MMBtu in Friday trading.

In New Mexico, at the San Juan Basin and in the rest of the Southwest desert region, temperatures stayed warm all week. Natural gas traded Monday for the week's high of $7.07/MMBtu and kept close to $7/MMBtu the next few days, but then tanked more than $1 to a low of $5.70/MMBtu Friday.

At the Southern California border, natural gas prices did what one would expect by peaking on Monday at $7.36/MMBtu and easing off by the weekend. A low trade of $7.02/MMBtu was recorded Friday.

At Malin, Ore., prices followed temperatures and demand. Values reached a peak of $7.18/MMBtu Monday and bottomed at $6.88/MMBtu Friday.

Alberta's prices remained relatively steady compared with the rest of the West, moving only 20c throughout the week. The high price of $7.11/MMBtu came Monday and the low of $6.92/MMBtu arrived in Wednesday trading [C. R.].

Western Electricity Prices
Week's End: May 7 - 11, 2007
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 5.25-738.60 5.25-48.57
Mid-Columbia 35-66.50 21-52
COB 55-74 31.50-57.25
NP 15 70-89.75 41.50-63
SP 15 69.25-89.75 41-63
Palo Verde 55-82.75 18-58.50

Archives of the Western Price Survey for the past year are also available online.


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