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Western Price Survey

Week's End Edition
May 14, 2010
Lackluster Energy Prices Continue

Low snowpack and streamflows in Washington and Oregon means that Northwest electricity markets are not likely to see the extremely low prices normally associated with spring runoff, which last year started in late May.

Last year, from late May until mid-June, Mid-Columbia off-peak power went as low as $0/MWh. In 2008, prices for Mid-C off-peak went negative, meaning some Northwest hydro plants paid others to take power.

But "we don't expect to use the words 'intense' and 'spring runoff' in the same sentence this year," said Katie Pruder-Scruggs, BPA spokeswoman. "It's hard to imagine that we will see negative prices this year."

In a robust economy, the lack of surplus Northwest hydro -- which California relies upon for about 5 percent of its yearly system power -- might lend support to higher electricity prices. But as the Northwest suffers, California has been blessed with abundant snowpack. And overall, macro-factors such as robust natural gas in storage and the recession continue to depress energy prices.

Last week, Mid-C's high trade for peak power was $40/MWh; the highest price for the hub this week was $35.25/MWh. The Palo Verde hub recorded the highest price for peak power this week -- $40/MWh. Daytime electricity traded at an average of $34 to $36/MWh at South of Path 15 and North of Path 15.

Peak demand on the Cal-ISO grid reached 28,967 MW Thursday at 3 p.m., a decrease from last week's peak demand of 29,213 MW on May 4.

Renewable energy in California saw strong contributions by both wind and geothermal sources. At peak production, renewables exceeded 3,500 MW of power on Monday, with 1,647 MW coming from wind, 1,064 MW from geothermal, and 363 MW from solar. Over a 24-hour period on Monday, renewables provided about 12.69 percent of system power, up more than 2.5 percent compared to last week.

At BPA, wind power generated approximately 2,537 MW on Tuesday, the highest amount for the week, and a whopping 40 percent of load.

According to the U.S. Energy Information Administration, natural gas inventories gained 94 Bcf last week -- a little shy of expectations, according to Enerfax. But the 2.089 Tcf of working gas in storage as of May 7 is the earliest such a volume has been reached since EIA began recording storage data.

Natural gas consumption will increase by 3 percent to 64.4 Bcf/day in 2010, the EIA predicted in its Short-Term Energy Outlook, released Tuesday. The agency attributed the uptick to greater use by both industry and electricity generators. And as natural gas rigs pull back from production, natural gas prices should rise later this year, thus lending support for higher power prices. The agency estimated Henry Hub spot prices would average $4.48/MMBtu this year, despite trading for an average of $4.03 in April. Henry Hub spot traded for $4.18/MMBtu Wednesday, 18 cents higher than the preceding week, and an average of $4.26 on Friday, up about 35 cents from May 7.

What's ahead: Los Angeles should see daytime high temperatures in the 70s Wednesday and Thursday after starting the week with cool, dry conditions. Temperatures for Seattle and Portland are expected to remain near normal, with high temperatures in the mid-60s. Rain is predicted along the West Coast, from Seattle to Santa Barbara County, on Monday or Tuesday [Linda Dailey Paulson].

Western Electricity Prices
Week's End: May 10 - 14, 2010
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 20.50-986 23.61-232.91
Mid-Columbia 30.50-35.25 25.25-31.50
COB 32.75-36 26.50-30.50
NP 15* 34.75-36.20 26.75-28.75
SP 15* 33.70-35.75 25-27.75
Palo Verde 33-40 24-32

* 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.

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

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