Western Price Survey
Week's End Edition
California peak-power prices dropped $8 on average in the May 31 to June 7 trading period, though the permanent shutdown of the San Onofre Nuclear Generating Station will likely keep Southern California prices high this year and next.
South of Path 15 prices are normally a bit higher than those at other California hubs owing to transmission congestion, but the absence of the 2,150 MW San Onofre plant has aggravated that pricing spread for more than a year. Such a situation will likely continue this year and next following the June 7 announcement from Southern California Edison that SONGS would be retired from the grid.
Working gas in storage reached 2,252 Bcf as of Friday, May 31, according to U.S. Energy Information Administration estimates, a net increase of 111 Bcf from the previous week and the highest weekly net increase since October 2011. Storage levels are now 21.5 percent less than a year ago and 3 percent below the five-year average.
The addition to storage was greater than the 99 Bcf the market had anticipated, according to the EIA.
"Storage builds have exceeded consensus in four out of the past five weeks, and suggest that the market appears to be significantly looser than in 2012 on a weather-adjusted basis," noted Barclays analysts in their weekly commodities report. They say this is the result of more coal-fired generation replacing natural gas. "We expect the storage deficit to continue to narrow during this injection season, and for [the national] storage level to end October at 3.8 Tcf."
Henry Hub natural gas values dropped 23 cents since May 31, trading June 7 at $3.79/MMBtu. Western price losses exceeded those of the benchmark, with Malin plunging 29 cents to $3.61/MMBtu, Southern California Border dropping 28 cents to $3.75 and PG&E CityGate down 26 cents to $3.90.
Western power prices generally followed natural gas prices lower. Mid-Columbia proved the exception, up $1.60 in the trading period to $38.90/MWh by Friday.
Here's how other average peak prices in the West fared since last Friday:
Off-peak prices were also mixed, with SP15 dropping $5.30 while COB added $3.15 since May 31. Values June 7 ranged from $27.20/MWh at Mid-C to $39.50/MWh at SP15.
Cal-ISO expected the week's highest peak demand of 36,485 MW to occur Friday, June 7. The Northwest Power Pool's highest peak demand for the week was 53,448 MW Thursday.
What's ahead: Cooler conditions are expected for the West Coast starting June 10. The exception is Phoenix, which should reach a daytime high of 111 °F Wednesday, June 12 [Linda Dailey Paulson].
* 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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