Western Price Survey
Week's End Edition
Summer came to the West Coast this week as an early-season heat wave baked the region and sent temperatures as much as 30 degrees higher than normal. Power prices shot past $120/MWh in California Thursday and remained well above $100 on Friday.
As the jet stream moved north into Canada, warm air from the desert Southwest swept up the West Coast. Record temperatures were being recorded across the region, with Portland basking in 98-degree weather Friday while Seattle enjoyed a high of 88, a temperature even higher than August levels, Accu-Weather said. Los Angeles residents were cooking at 98 degrees, and even San Francisco was nearing 90.
Even though utilities across California called for residents to conserve energy, power demands spiked this week.
The California Independent System Operator said demand for electricity hit a high of 38,700 MW Thursday and was expected to clear 41,000 MW Friday. This weekend is expected to be a scorcher, too, with a peak of 42,400 MW expected Saturday.
Even the release of more water from the reservoirs in the Pacific Northwest wasn't enough to dampen hot power prices. The U.S. Army Corps of Engineers in Portland has slowly been releasing more water this spring to avert a large spring runoff.
At the California-Oregon border, peak prices this week climbed $5 to an average of $92.13/MWh. Average off-peak power rose to $59.77/MWh, up $14.
Daytime Mid-Columbia power ended the week $5 lower at $74.91/MWh, while nighttime values shot up from $39.24 Monday to $50.98/MWh on Friday.
In California, peak prices were about the same for North of Path 15 and South of Path 15. Average daytime trades rose $8 to $103.65/MWh in the north and $103.38/MWh in the south. Off-peak prices were nearly identical, with Northern California power increasing $12 to an average of $74.83/MWh and Southern California electricity climbing $13 to $75.51/MWh.
Palo Verde peak power climbed $7 to an average of $95.86/MWh, and off-peak electricity settled at $72.48/MWh for a $12 rise over Monday.
This week offered some views of where electricity prices will go this summer. The Federal Energy Regulatory Commission expects wholesale prices to be "considerably higher" than last year, largely because of rising natural gas prices.
Future prices on the Intercontinental Exchange are 50 to 90 percent higher than last summer due largely to falling imports, low supplies, and soaring demand, the agency said in its summer energy-market assessment.
Southern California is at greater risk for outages this summer, FERC said, despite a rise in voluntary conservation and demand-response programs. Major transmission outages, coupled with lower power reserves and hotter-than-expected weather, could tip the region into rolling blackouts [Kristina Shevory].
Natural Gas Soars With Crude, LNG Reroutes, Rig Issues and AC Needs
High crude prices, sluggish imports and a delay in the reopening of a key rig in the Gulf of Mexico helped prop up natural gas prices this week.
U.S. imports of liquefied natural gas averaged 2.9 Bcf/d in 2007, three times higher than the current level.
The U.S. Energy Information Administration reported that LNG cargoes are being diverted to Europe and Asia where exporters can earn a better price. Meanwhile, the reopening of the Independence Hub, which pumps 8 percent of the Gulf's natural gas, has been delayed until the first half of June.
The largest storage injection to date this year was not enough to quell prices. The EIA reported storage rose last week by 93 Bcf to 1.529 Tcf. In the Western United States, supplies rose by 13 Bcf to 210 Bcf, and are now 26 percent lower than last year. Compared to the five-year average, supplies are 12 percent lower.
The EIA predicted that even though the storage injection season is under way, natural gas prices are likely to remain high through the summer and into the fall from air conditioner and electric generation use.
Prices for July and August natural gas have risen to $11.55/MMBtu and $11.64/MMBtu, according to the New York Mercantile Exchange. And the hurricane season begins in just a few weeks [K. S.].
Archives of the Western Price Survey for the past year are also available online.
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