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Western Price Survey

Week's End Edition
June 12, 2009
As Hydro Production Falls, Electricity Prices Rise

Electricity prices advanced this week across the West as hydropower production fell.

The initial bulk of snowmelt that causes a rapid rise in hydroelectricity production is now gone, and temperatures in the Northwest were cooler than the previous week. As a consequence, power generated at the Bonneville Dam fell as flow dropped from 183.90 thousand cubic feet per second (Kcfs) to 174.40 Kcfs, according to the U.S. Army Corps of Engineers. Bonneville, with a capacity of 1,077 MW, is the lowest dam on the Columbia River and is a key indicator of hydroelectricity production.

Since Monday, average prime Mid-Columbia prices rose $8 to $24.14/MWh, while off-prime trades vaulted from an average of 50 cents on Monday to $19.48/MWh on Friday.

Meanwhile, the California-Oregon border saw peak prices climb $6 to an average of $25.52/MWh. Off-peak trades skyrocketed $17 to average $19.86/MWh.

The Columbia Generating Station in Washington state is shuttered while one-third of the reactor core's fuel assemblies are swapped out, and is projected to return to full capacity later this month. The 1,150 MW plant has been closed since Mother's Day.

Elsewhere, in California, daytime values added about $1 to $25.27/MWh at North of Path 15, and $24.63/MWh at South of Path 15. Nighttime trades increased almost $11 in the north to average $19.85/MWh, and $10 in the south to $19.03.

Palo Verde peak prices fell less than $1 to average $25.32/MWh. Average off-peak values increased almost $8 to $19.53.

Demand for power fell from a Monday high of 29,800 MW to 29,000 MW on Wednesday, the California Independent System Operator said, but then bumped up to 29,500 MW on Thursday. Friday's peak usage is projected to fall to 29,300 MW and then remain around 27,100 MW this weekend.

Electricity prices got no help from natural gas, which continues to accumulate in storage. Last week, natural gas storage rose 106 Bcf to 2.443 Tcf, leaving inventories 30.3 percent higher than a year ago and 21.8 percent greater than the five-year average.

Western stockpiles climbed by 16 Bcf to 395 Bcf and are now 49.1 percent greater than in the same period last year, and 34.4 percent higher than the five-year average.

Looking Ahead: Natural gas supplies have been setting records this year because of little demand and a supply overhang due to a domestic drilling boom. At the end of May, inventories were at an all-time high of 2.367 Tcf, according to the U.S. Energy Information Administration's short-term energy forecast, and are projected to remain at record levels through October. In May, a storage build of 465 Bcf marked the biggest for that month since 1976. By the end of October, storage is forecast to hit 3.659 Tcf -- a new record. Last year, supplies peaked at 3.565 Tcf.

Meanwhile, natural gas demand is expected to ebb this year by 2.2 percent overall, and 8 percent among industrial users. Low prices have also shaved production, which is on target to fall 1.1 percent this year, and 2.6 percent in 2009.

As prices and demand have fallen, drillers have shut down operating rigs across the country. As of last week, the number of natural gas rigs in operation has fallen 57 percent since hitting a high of 1,606 in September, according to Houston oil-field services firm Baker Hughes.

Electricity consumption across the country dipped 3 percent during the first quarter versus the same period last year, according to the EIA. Overall usage is projected to slip by 1.8 percent in 2009. Despite the downturn in demand, electricity prices grew 8 percent during the quarter because natural gas price decreases could not be passed on to consumers in lower fuel costs. Consumers will finally see lower fuel prices later this year, with prices increasing around 5 percent for the year [Kristina Shevory].

Western Electricity Prices
Week's End: June 8 - 12, 2009
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 14.01-113.54 8-37.94
Mid-Columbia 14-25 0.25-20.25
COB 17.50-25.75 2-20.55
NP 15* 21.75-25.60 8.70-20
SP 15* 20.75-25 8.50-19.25
Palo Verde 23-28 10-20

* 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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