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Western Price Survey

Week's End Edition
May 13, 2011
Western Energy Prices Stay Depressed

Western energy prices struggled to recover from last week's drop in commodities prices, with both natural gas and electricity prices sagging.

Moderate temperatures across the continent also meant less power demand, particularly in the West, where some regions continue experiencing unseasonably cool weather.

Henry Hub spot prices traded at $4.23/MMBtu on May 4, down 36 cents over the previous Wednesday. By Friday the hub traded for an average of $4.09. Futures prices for the hub reached $4.16/MMBtu Friday, down 10 cents over the previous week.

Working natural gas in storage rose to 1.827 Tcf by Friday, April 6, after a 70 Bcf net injection, according to the U.S. Energy Information Administration. Storage is about 249 Bcf below the same period last year and 37 Bcf below the five-year average.

In its Short-Term Energy Outlook released May 10, the EIA projected natural gas inventories will "remain robust" this year based on both higher production in the remainder of the 2011 injection season and on milder summer weather predictions. Henry Hub prices are forecast to average $4.24/MMBtu this year, a decline of 15 cents from the 2010 average.

The agency anticipates prices will tighten considerably in 2012 with production declines, with Henry Hub averaging $4.65/MMBtu next year.

Western power prices generally failed to recover from a midweek tumble.

In the Friday-to-Friday trading period, May 6 to May 13, here's how average peak power prices fared:

  • NP15: Earned $1.75, ending at $34/MWh.
  • SP15: Off about 20 cents, ending at $35.90/MWh.
  • Palo Verde: Lost about $1.20, ending at almost $34.40/MWh.
  • Mid-C: Dropped roughly $11.80 to about $19.10/MWh.
  • California-Oregon Border: Down $8.60 to about $24.60/MWh.

With robust hydro and wind production in the Northwest, off-peak average power prices dropped between about $5.90 and $14 during the trading period. By midweek, spot prices for nighttime power traded for a low of -$2.10/MWh at Mid-Columbia and 25 cents/MWh at the California-Oregon Border. Prices failed to pick up appreciably in the two final days' trades, and Western prices ranged from about $1.85 to $18.55/MWh (see chart).

Peak demand on the Cal-ISO grid reached 29,810 MW Thursday, which was the week's high. Peak use should generally remain less than that the week of May 16 as a result of cooler weather.

What's ahead: Seattle and Portland are expected to alternate between showers and sun throughout next week, with conditions generally rainy and cool well into Thursday. Similar conditions are anticipated for San Francisco, which expects warmer weather starting Wednesday and lasting well into Friday. Southern California gradually warms through the week, with Los Angeles predicted to reach 72 °F Thursday. Palo Verde highs start in the low 80s Monday and should exceed 90 °F by Thursday [Linda Dailey Paulson].

Western Electricity Prices
Week's End: May 9 - 13, 2011
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 14.42-45.27 10.50-36.29
Mid-Columbia 15-32 -2.10-7.50
COB 22-33 0.25-10.25
NP 15* 30.25-34.50 8.50-12.50
SP 15* 32-37.50 8-16
Palo Verde 32-39 9-19

* 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.

Please contact with questions or comments about this site.

Contact Chris Raphael, editor with questions regarding Price Survey Content.

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