Western Price Survey
June 10, 2005
As marketers are sometimes prone to say, "prices this good may not last."
This time of year, when East Coast and Southwest temperatures are in the 80s and 90s, many Californians have enjoyed forecasts in the 60s and 70s. When coupled with few transmission and power plant outages, this means cheap Western power--at least compared to what other U.S. hubs paid this week.
In most regions of California, off-peak power idled at a range of 20 mills to 25 mills/KWh through midweek before climbing above 35 mills in Friday trading. Peak power traded from 41 mills/KWh on Monday to 58 mills/KWh on Friday. Electricity prices at Houston hubs, on the other hand, hit 90 mills on Friday; the Northern Illinois hub paid 74 mills/KWh.
At those levels, even Southern California and Arizona border customers, who often pay the most in the West, may feel grateful. South of Path 15 peak power started the week between 41 mills and 46 mills/KWh before shooting to a spread of 46 mills to 57.25 mills/KWh in Wednesday trading. It finished Friday with a tight spread of 55.50 mills to 57.50 mills/KWh. Off-peak power started at 18.50 mills/KWh on Monday and reached 29 mills in Thursday trading before rocketing to 41.75 mills/KWh Friday.
Palo Verde peak power started the week at a low of 46.25 mills/KWh, climbed to about 50 mills/KWh midweek and found a summit of 57 mills/KWh for Monday deliveries. A low of 19 mills/KWh was set on Monday for nighttime power, which gained a few mills midweek and rushed to 42.50 mills/KWh Friday.
North of Path 15 peak power traded in the mid-to-upper 40 mills most of the week, then scrambled to 58 mills/KWh on Friday. Low-demand power traded Monday at a low of 18.50 mills/KWh and went for 20 mills to 28 mills/KWh most of the week. On Friday, the price hit 41.75 mills/KWh.
Daytime power at the California-Oregon border, which traded Monday between 36 mills and 40 mills/KWh, gained a few mills Wednesday and Thursday and traded at a Friday high of 50 mills/KWh. Off-peak power, which sat at a low of 16 mills KW/h on Monday, reached 25 mills/KWh on Tuesday and went for around 36 mills/KWh by Friday.
Prices in the Mid-Columbia region continue to be the cheapest. Peak power started off between 28 mills and 37 mills/KWh, hit 39 mills on Tuesday and 40 mills/KWh for Monday deliveries. Off-peak power, which traded at a cheap 13.50 mills/KWh Monday, remained at around 20 mills/KWh the rest of the week. Friday saw prices reach 34 mills/KWh.
Major power plant outages were scarce. An outage of 1,247 MW Unit No. 3 of the Palo Verde nuclear plant has been extended by two weeks for additional maintenance. The unit, which was supposed to be operational this weekend, went out of service on May 22. The 1,100 MW Columbia Generating Station, which has been on a refueling outage, was listed by the U.S. Regulatory Commission at operating at 5 percent on Friday.
On Tuesday the U.S. Department of Energy released its June "Short Term Energy Outlook." The report predicted that electricity demand would grow by 2.4 percent in 2005 and an additional 2.0 percent in 2006. "Third and fourth quarter 2005 year-over-year electricity demand growth is expected to be particularly strong," the report stated, "as cooling and heating demand are likely to be higher than in the mild third and fourth quarters of 2004."
The report also estimated that monthly average spot prices for natural gas would likely reach $7.50 Mcf by the end of the year. The natural gas market would tighten, the outlook predicted, as summer cooling demand picks up and would continue to increase once winter sets in, when the heaters are turned on [Chris Raphael].
California Natural Gas Falls
Hot weather has worried traders of natural gas on the East Coast, where prices have been well above $7/MMBtu. The West, in the meantime, has enjoyed prices at or below the $6/MMBtu range-- and prices steadily deteriorated throughout the week.
Permian Basin natural gas traded at a high of $6.40/MMBtu Tuesday before falling to a low of $5.80/MMBtu in Friday trading. San Juan Basin natural gas traded at a Monday high of $5.91/MMBtu before falling to $5.48/MMBtu on Friday.
Southern California natural gas, which began the week at $6.08 to $6.24/MMBtu, dropped below $6 in Thursday trading and went for a low of $5.74 for weekend deliveries.
The U.S. Department of Energy reported that an additional 112 Bcf of natural gas went into storage last week in the Lower 48 states, bringing stocks to 1,890 Bcf--which is 20 percent above the five-year average [C.R.].
Archives of the Western Price Survey for the past year are also available online.
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