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Western Price Survey

Week's End Edition
May 21, 2010
Power Prices Go Low; Sale May Not Last Much Longer

Electricity prices fell sharply this week in the West, but prices at key hubs could climb this summer as a lack of Northwest hydroelectric generation tries Western energy markets.

This week, as the spring runoff made its presence known, Mid-Columbia off-peak prices went for a low of $5/MWh while peak prices bottomed at $11/MWh. Off-peak prices also fell to below $20/MWh at California hubs. Low power prices are of course not here to stay, however. Northwest snowpack is 70 percent of normal to date, and "diminished runoff will reduce the water available for hydroelectric generation and require the increased use of other resources, most likely gas-fired power plants," FERC stated in its 2010 summer outlook, released Thursday. Not only does that mean a lack of cheap hydro, but it also means possibly more expensive gas, FERC stated.

On the positive side, California should have a normal hydro year, and new market structures, moderated demand due to the recession, and the availability of new gas-fired capacity "should reduce the risk of a general market dysfunction" this summer, FERC stated. But the lack of Northwest hydro will nonetheless be "felt in the market," the agency said.

In addition, the Bonneville Power Administration has reported that decreased flexibility in hydro dispatch may limit the agency's ability to use hydropower resources for ancillary services during windy periods.

Summer forward power prices at Mid-C, as of May 1, are 38 percent higher than a year ago, according to FERC's outlook. South of Path 15 forward prices are around $49.72/MWh, 13 percent above last year's prices, while Palo Verde forward prices are $48.43/MWh, 17 percent above last year's levels.

California renewable-energy generation was weaker this week. At peak production, renewables provided about 11.17 percent of system power on the Cal-ISO grid over a 24-hour period on Thursday. Of that, 1,509 MW came from wind, 1,088 MW from geothermal, and 368 MW from solar. Peak wind generation for BPA exceeded 2,300 MW this week.

Daytime Alberta prices returned to relatively normal by Friday after peaking at $1,000/MWh Tuesday and Wednesday. Four coal-fired power plants representing 1,521 MW of generation went off line early in the week. Without wind power to compensate for higher demand, prices spiked, according to The Calgary Herald.

According to the U.S. Energy Information Administration, natural gas inventories increased by 76 Bcf to 2.165 Tcf on May 14. Storage remains at a historical high for this time of year.

The agency reported Henry Hub spot prices were up, trading for $4.28/MMBtu Wednesday, 10 cents higher than the preceding week. Spot prices traded at an average of $4.11/MMBtu on Friday.

What's ahead: Another low-pressure system will move into Seattle and Portland Tuesday, and is expected to bring more precipitation with it. California National Weather Service forecasters were holding back from assessing the effects of the same front on their regions. A NWS forecast for the San Francisco Bay Area stated that this coming week "could be interesting" [Linda Dailey Paulson].

Western Electricity Prices
Week's End: May 17 - 21, 2010
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 18.54-999.99 6.82-54.23
Mid-Columbia 11-32 5-25.75
COB 23.25-35.25 15-27
NP 15* 32-36.50 18-27.25
SP 15* 31.50-36 17.50-26.50
Palo Verde 33-38.25 19-26.50

* 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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