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Western Price Survey

Week's End Edition
May 29, 2009
Power Values Rebound, but Northwest Hydro, Cheap Gas Keep Prices Low

Warmer temperatures helped electricity prices recover from their Memorial Day slump this week, but prices remain depressed because of the recession, which has produced low prices for commodities such as natural gas.

Record amounts of natural gas moving into storage and the snowmelt season in the Northwest have not provided any uplift for electricity values.

For example, off-peak power went as low as $0 in the Mid-Columbia hub early in the week, though it rebounded to a spread between $2.50 and $11/MWh by Friday. According to the Bonneville Power Administration, last weekend an Oregon wind farm was asking customers to take power for free to reduce their load, and the Bonneville Dam is generating 25 percent more power. That figure is expected to rise as temperatures continue to warm.

Since Tuesday, daytime Mid-Columbia values climbed exactly $11 to close at $27.21/MWh. Nighttime prices increased about $9 to average $11.18/MWh.

At the California-Oregon border, peak prices rose almost $9 to average $29.03/MWh. Average off-peak trades added nearly $8 to $12.06.

In California, peak prices rose $3 to $33.12/MWh at North of Path 15, and $4 to $31.62 at South of Path 15. Nighttime power gained $6 to $21.70/MWh in the north and $18.40 in the south.

Palo Verde prime trades moved $2 higher to $31.92/MWh; deliveries of nighttime power gained $3 to $18.44/MWh.

Power demand climbed following the Memorial Day holiday on Monday, rising from 27,800 MW to 34,400 MW on Thursday, the California Independent System Operator said. Usage, however, was expected to fall from 33,600 MW on Friday to 27,800 MW by Sunday.

The weekly injection of natural gas in underground storage skyrocketed by 106 Bcf last week -- the biggest weekly increase so far this year and for all of last year -- the U.S. Energy Information Administration said. At 2.213 Tcf, there is now 31 percent more in storage than in the same period last year, and 21.6 percent more than the five-year average.

A boom in domestic production, a drop-off in demand thanks to the recession, mild weather and low prices all were reasons behind the significant run-up in storage. A large price differential between current and future prices has also led to a large supply jump. For example, Nymex natural gas for July delivery closed at $3.82/Mcf on Friday, while the December contract settled at $5.58/Mcf.

Western natural gas storage rose by 15 Bcf to 360 Bcf, and now stands 55.2 percent above last year's levels and 35.8 percent above the five-year average.

Spot natural gas prices were up this week a modest 40 cents/MMBtu on average, with most hubs trading around the $3/MMBtu range.

What's ahead: This weekend, temperatures will remain warm, but start dropping into the low 80s and 70s in Portland and Seattle, respectively, AccuWeather said. San Francisco will be in the low 60s, while Los Angeles will see the weather warm slightly into the mid-70s. Phoenix will continue to see temperatures at or near the triple-digit mark.

After being off line for scheduled maintenance and refueling, Arizona's Palo Verde nuclear power plant started ramping up power at its third 1,336 MW unit on Thursday and was at 21 percent capacity on Friday. On Monday, the Diablo Canyon nuclear power plant's 1,130 MW second unit returned to full operation after tunnels for its ocean-water cooling system were cleared of marine growth last week.

The 1,150 MW Columbia Generating Station went off line on Mother's Day to swap out one-third of the reactor core's fuel assemblies, and will return to full power in mid-June [Kristina Shevory].

Western Electricity Prices
Week's End: May 25 - 29, 2009
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 13.24-304.39 7.85-25.38
Mid-Columbia 10-28.50 0-20.50
COB 18-30 3.25-21
NP 15* 29.25-33.75 15-26.25
SP 15* 25.50-32.50 11-20.50
Palo Verde 27-32.75 13.50-22

* 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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