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Western Price Survey

May 13, 2005
Power Prices Take Seesaw Ride

After starting the week strong, electricity prices had somewhat of a pre-summer sale on Wednesday and Thursday before recovering strength on Friday.

In most areas, off-peak power prices bottomed on Thursday and reached their apex for the week on Friday while peak prices, which also hit lows on Thursday, never recovered Monday spreads.

The week's cheapest prices came from the Mid-Columbia region, where ample rainfall has left hydro resources with electricity to spare. Peak power started the week trading between 46 mills and 48 mills/KWh but by Thursday prices took a 37 percent plunge to a low of 29 mills/KWh. Off-peak power, which on Monday traded at a high of 37 mills/KWh, dropped to a low of 17 mills/KWh on Thursday.

South of Path 15 peak power traded most of the week near 50 mills/KWh. Off-peak power went to a low of 24.50 mills on Thursday, and hit a high of 43.75 mills/KWh Friday.

Palo Verde peak power began the week trading between 50.50 mills and 52.25 mills/KWh, sank to a low of 46.50 mills on Thursday, but scooted up to 53 mills/KWh in Friday trading. Off-peak power at the hub hit a nadir of 24 mills/KWh for packages to be delivered this weekend. The cost of nighttime power took off on Friday, hitting a high of 41.25 mills/KWh.

California-Oregon border peak power traded near the 50 mills/KWh level early in the week, dropped by about 10 mills in Thursday trading and closed Friday between 41 mills and 44.50 mills/KWh. Off-peak power at COB started the week in the mid-30s, bottomed out at 19.75 mills/KWh on Thursday before soaring to a high of 41.50 mills/KWh the next day.

North of Path 15 peak power, meanwhile, went for 47 mills to 55 mills/KWh. Similar to trading activity at other Western hubs, NP15 off-peak power lost strength as the week wore on, dropping from about 37 mills/KWh on Monday down to 22.75 mills/KWh for weekend packages traded Thursday. Friday saw low-demand power costs spread between 32.50 mills and 42.50 mills/KWh [Chris Raphael].

Natural Gas Costs Sink Yet EIA Warns High Costs Will Continue

Natural gas continued a steady decline this week, continuing well below the $6/MMBtu mark and reaching its lowest prices in Friday trading.

Natural gas at the Permian Basis traded between $5.45 and $6.07/MMBtu and San Juan Basin prices were between $5.37 and $5.89/MMBtu.

Outside of the PG&E CityGate price, the highest price for natural gas continues to be at the Southern California border. Gas there started off the week trading between $6.15 and $6.19/MMBtu. By Friday prices had dropped to a low of $5.67/MMBtu.

Natural gas reserves for the Lower 48 states climbed to 1,509 Bcf for the week ending May 6, a gain of 54 Bcf from the previous week. The amount in storage is 22.3 percent above the five-year average. Storage in the West hit 237 Bcf.

The recently declining price of crude oil has caught the attention of energy analysts. Crude dipped below $50 this week on news that U.S. inventories were the highest since 1999. A May 10 "Short-Term Energy Outlook" report from the U.S. Energy Information Administration, however, cautioned that gas prices will remain high.

The report cited continued high world oil prices, a strong economy, below-normal Pacific Northwest hydroelectric resources through mid-summer, and limited growth in domestic natural gas production. The report estimated Henry Hub prices to post averages of over $7.00/Mcf in 2005 and 2006.

With the high demand for natural gas, companies are looking for ways to expand pipelines to accommodate additional fuel. The Transwestern Pipeline Company has begun service on its San Juan 2005 Expansion Project. Service on the expansion project began on May 1.

The San Juan lateral expansion added 375 million cubic feet per day of natural gas pipeline capacity to the system. A new 72.6-mile spur loop line interconnects with the main pipeline near Gallup, New Mexico, and runs north to the Bloomfield Station, which is near the Colorado state line.

Also, TransCanada Corp. and Sempra Energy began a joint open season this week for shipper interest in a potential expansion of the North Baja natural gas pipeline system.

The system includes TransCanada's North Baja Pipeline along with two Sempra pipelines: the Gasoducto Bajanorte Pipeline and Transportadora de Gas Natural de Baja California.

The open season will gauge shipper interest in moving volumes away from any additional or expanded LNG regasification facilities. Parties may submit a request for service on a new pipeline to interconnect a specific LNG terminal site to an interconnect point with the Gasoducto Bajanorte pipeline. They can also submit a request for service on the Transportadora de Gas Natural de Baja California or the Gasoducto Bajanorte, or submit an indication of interest in interconnecting the GB or NBP system with other markets.

The open season began May 11 and will conclude at 5 pm on June 8. Based on the interest they receive, Sempra and TransCanada will determine the facilities required to provide the requested services. The deadline for entering into binding firm transportation agreements will be September 1. The in-service date of the expansion capacity will depend on shipper requests, along with how fast the pipeline can get regulatory approval and be built [Chris Raphael with Caroline J. Keough].

Western Electricity Prices
May 9 - 13, 2005
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 10.37-348.79 8.92-58.97
Mid-Columbia 29-49 17-37
COB 34-51 19.75-41.50
NP 15 47-55 22.75-42.50
SP 15 47.50-55.25 24.50-43.75
Palo Verde 46.50-53 24-41.25

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


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