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Western Price Survey

May 24, 2013
Feds Expect High Summer Energy Prices

A rebound in natural gas prices this summer could trigger higher power prices, according to FERC's Summer 2013 Energy Market and Reliability Assessment.

Higher natural gas forward prices are moving electricity forward prices up, which "may portend upward price trends on power prices for this summer," FERC notes in the report. Southern California Border gas has a forward price of $4.47/MMBtu, compared to about $2.50/MMBtu in 2012. The only forward price below $4.20, FERC notes, is at Sumas on the Canada-Washington border, which relies primarily on hydroelectricity to meet summer power needs.

Electricity forward prices, in response, are 25 percent to 58 percent higher than similar forwards a year ago, with South of Path 15 forwards reaching $60/MWh. Higher electricity forwards at SP15, Mid-Columbia and Palo Verde are anticipated because of lower hydro availability.

The ongoing outage at the San Onofre Nuclear Generating Station could also influence Western power-price swings this summer, FERC said.

Use of higher-cost local generation and the possibility of fires disrupting regional transmission and generation, as well as California's greenhouse-gas cap-and-trade program, could place upward pressure on California power prices, creating greater market volatility, the report states.

Meanwhile, working gas in storage reached 2,053 Bcf as of Friday, May 17, according to U.S. Energy Information Administration estimates, a net increase of 89 Bcf from the previous week. Storage levels are now 24.9 percent less than a year ago and 3.9 percent below the five-year average.

Henry Hub natural gas values jumped 26 cents since last Friday, trading May 24 at $4.15/MMBtu. Western prices followed suit with PG&E CityGate and SoCal Border each adding 22 cents, trading at $4.21/MMBtu and $4.04/MMBtu, respectively.

Average peak-power values, however, posted losses across the board since last Friday as cooler weather entered the West, which is also in spring runoff season:

  • Mid-Columbia: Down 55 cents to $32.95/MWh.
  • California-Oregon Border: Dropped $6.35 to $34.30/MWh.
  • North of Path 15: Lost $5.50 to $42/MWh.
  • South of Path 15: Tumbled $12.60 to $46.40/MWh.
  • Palo Verde: Down $1.10 to $37.55/MWh.

Off-peak prices, however, added between $3.55 and $11.55 since last Friday, led by Mid-C. SP15 proved the exception, losing 90 cents in the trading period. Prices May 24 ranged from $18/MWh at Mid-C to $37.50/MWh at SP15.

Peak demand on the Cal-ISO grid reached 34,606 MW Monday, which was the week's high, according to the grid operator. Northwest Power Pool peak demand reached 48,459 MW Wednesday.

What's Next: West Coast temperatures are expected to remain cooler than normal, with below-average temperatures forecast for the West Coast through at least June 2 [Linda Dailey Paulson].


Western Electricity Prices
Week's End: May 20 - 24, 2013
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 9.98-60 9.95-31.48
Mid-Columbia 24-40 (-)0.25-22
COB 29.75-41.50 2-24.25
NP 15* 39.50-42 28.25-31.25
SP 15* 44-57 30-38
Palo Verde 35.75-42 20.50-31.50

* 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.


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