Western Price Survey
June 5, 2015
Drought across the Western United States is resulting in less hydro generation and more use of natural gas use for power.
"The drought has already driven gas demand for power generation to record levels as hydro generation has plummeted," Barclays analysts wrote in a June 1 report. "California has yet to feel the brunt of the hydro shortfall as the state's peak hydro usage typically occurs in June, July and August," the analysts said. Stronger natural gas prices on the West Coast are expected as a result.
Working gas in storage reached 2,233 Bcf as of May 29, according to U.S. Energy Information Administration estimates, a net increase of 132 Bcf from the previous week. This was the largest implied weekly net injection ever reported in the EIA's Weekly Natural Gas Storage Report, according to the agency.
Natural gas storage levels are now 50.7 percent higher than a year ago and 1 percent higher than the five-year average.
Henry Hub gas spot values fell 18 cents in Thursday-to-Thursday trading, ending at $2.60/MMBtu June 4. Western natural gas prices dropped between 9 and 17 cents this week, with hubs dropping below the $3/MMBtu mark. PG&E CityGate posted the greatest loss, down 17 cents to $2.94/MMBtu.
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Average daytime power prices posted gains June 5, especially in the Pacific Northwest. Mid-Columbia jumped $10.15 to $31.70/MWh in May 29 to June 5 trading. Average daytime prices ranged from $25.95 at Palo Verde to $34.90 at North of Path 15.
Average nighttime prices also rose, with values June 5 between $21.15/MWh at Palo Verde and $28 at South of Path 15.
The Cal-ISO reported total renewables reached 11,218 MW June 3. Solar power production reached a peak of 6,051 MW May 31, topping a previous peak set on April 16. And a new solar instantaneous peak -- combined solar-thermal and photovoltaic production -- of 6,078 MW was recorded May 31, according to the grid operator.
Western natural gas prices were significantly lower in May compared to May of last year. The average high prices at Malin and Southern California Border in May dipped below the $3/MMBtu mark; in 2014 these hubs had average high prices of $4.70/MMBtu and $4.89/MMBtu. Average Western power prices during May 2015 were also lower (see "Price Trends" on next page) [Linda Dailey Paulson].
Archives of the Western Price Survey for the past year are also available online.
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