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Western Price Survey

Week's End Edition
June 11, 2010
Hydro Depresses Northwest Prices

Western power prices continued to decline as intense rains contributed to excess generation throughout the region. Only California average prices saw any improvement by the end of the week.

Off-peak electricity dipped into negative pricing at Mid-Columbia, ending the week $15/MWh lower than last Friday, June 4 (see table). Mid-C reached a seasonal low of -$5.50/MWh on June 11.

To compensate for excess hydro, Columbia Generating Station, the Hanford, Wash. nuclear facility owned by Energy Northwest, decreased generation to 55 percent June 4 at the request of the Bonneville Power Administration. An additional reduction was made June 11 to 25 percent, according to BPA.

Hydro generation has been "maxed out," according to BPA spokesman Michael Milstein. Rainfall amounts in the Snake River Basin at 400 percent of average the first weeks of June were the greatest contributor to the excess water. Milstein said the agency has consistently generated 70,000 MWh per day of extra power since Wednesday, which it has given to other utilities for free.

He added that entities, including some Canadian agencies, have held back water and otherwise helped BPA cope with "this big slug of water." Drier conditions in the region are expected in the upcoming week, however, which may mean a return to insufficient water availability for generation.

Excess hydro depressed prices throughout the West, even in California, where nighttime power dipped below $10/MWh. It also showed a profound effect on peak prices in Mid-C and at the California-Oregon Border (see table).

The surplus hydro had a lesser effect on daytime prices at North of Path 15, which traded Friday for an average of $37.19/MWh, up $1.76 for the week but down about $4 from June 4.

Peak demand on the Cal-ISO grid reached a high of 33,528 MW June 7 at 4 p.m. An increase to 35,160 MW is anticipated Monday, June 14.

According to the U.S. Energy Information Administration, a 99 Bcf addition to gas reserves provided a total of 2.456 Tcf in storage as of June 4. The injection was less than historical levels for the week, but working gas in storage has continued to exceed the five-year average for the past 11 weeks, according to the agency.

Henry Hub spot prices traded for $4.75/MMBtu June 9, up 43 cents compared with the previous Wednesday, according to the EIA. The average price this year should be $4.49/MMBtu and is anticipated to climb to $5.06 in 2011, according to the EIA Short-Term Energy Outlook, released June 8. Spot prices traded for an average of $4.68/MMBtu June 11, up 8 cents compared with last week.

The EIA expects natural gas prices to remain low throughout the summer, triggering a decline in drilling and prompting higher prices later in the year.

What's ahead: A front expected from British Columbia should bring back below-normal temperatures to the Northwest this week. Warmer, dry weather with temperatures in the mid-90s is expected throughout Northern California, along with high winds. Temperatures in the San Diego-Inland Empire areas are expected to warm from unseasonable lows [Linda Dailey Paulson].

Western Electricity Prices
Week's End: June 7 - 11, 2010
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 9.41-161.51 8.09-50.29
Mid-Columbia 1.50-14 -5.50-1.25
COB 11.50-20.50 2-4.50
NP 15* 28.50-37.50 7.50-18.25
SP 15* 28.25-37.25 6.25-18.25
Palo Verde 26.50-40 12.50-20

* 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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