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Western Price Survey

May 22, 2015
Summer Power Prices May Follow Natural Gas Values' Lead

Power prices may generally follow natural gas prices lower this summer, according to the FERC Summer 2015 Energy Market and Reliability Assessment, but the drought in the West could lead to higher energy prices in the region.

Compared to the same time last year, forward peak power prices across the nation are down by an average of 24 percent, which FERC says reflects the decline in natural gas values. Forward peak at the Mid-Columbia hub, however, is only down by 13 percent to around $37/MWh.

FERC also noted this is the first summer that the Cal-ISO energy imbalance market has been operational. Its staff will be monitoring the market performance "to assess any implications that may arise under this summer's peak load conditions."

Working gas in storage reached 1,989 Bcf as of May 15, according to U.S. Energy Information Administration estimates, a net increase of 92 Bcf from the previous week. Storage levels are now 59 percent greater than a year ago and 1.7 percent less than the five-year average.

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Henry Hub gas spot values rose 6 cents in Thursday-to-Thursday trading, ending at $2.93/MMBtu May 21. Western natural gas prices added between 3 and 7 cents. El Paso-Permian proved the exception, eroding a penny to $2.65. Stanfield natural gas gained 7 cents, ending at $2.64/MMBtu.

Average natural gas prices should reach $2.45/MMBtu this quarter, according to Barclays' May 22 commodities report. With prices up roughly 40 cents since the beginning of April, higher natural gas prices may reduce power-sector demand.

South of Path 15 peak power dropped $10.25 on May 21, then shot up $13.65 to around $31.95/MWh the following day (see chart). Cal-ISO also reported a "physical obstruction" on Path 15 transmission lines May 21 that limited power flows. Four lines in the Fresno area -- two 500 kV lines and two 230 kV lines -- had a plastic sheet from a farmer's field tangled in them, according to Pacific Gas & Electric. Service to customers was not disrupted, said PG&E spokesman Brian Swanson.

The grid operator reported total renewables production reached 10,272 MW on May 18. Solar production reached 5,964 MW May 19 with an instantaneous peak that day of 6,072 MW. The previous all-time peak was 6,038 MW, recorded April 28.

Peak demand on the Cal-ISO grid reached 28,272 MW May 20, which should be the week's high [Linda Dailey Paulson].

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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