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Western Price Survey

Week's End Edition
June 13, 2008
Wildfires Trip Transmission Lines; Heat Keeps Power Prices Aloft

The dry season has helped produce wildfire conditions in Humboldt, Monterey, Butte and Santa Cruz counties, with 40,000 acres already scorched.

In Humboldt County, fires tripped two 115 kV transmission lines near Paradise, Calif., resulting in a 20 MW power outage yesterday, according to the California Independent System Operator. The same fire was burning close to two of the three lines of the California-Oregon Intertie, but was not considered a threat as of this morning. Southward flows on the intertie have been reduced to 4,310 MW, the Western Electricity Coordinating Council reported Friday, but the culprit was Northwest generation. Southward flows on the Pacific DC Intertie were limited to 2,990 MW for the same reason.

The Columbia Generating Station in Washington state was still operating at 85 percent capacity because of the high runoff levels.

Peak prices at the Mid-Columbia hub staged a $19 rally on Thursday, but shed $10 for the week to an average of $25.58/MWh on Friday. Average off-peak prices jumped from 11 cents Monday to $4.65/MWh on Friday after spending most of the week in negative territory.

North and South of Path 15 peak power prices were essentially flat. NP15 picked up about 60 cents to close the week at $104.58/MWh, while SP15 shaved a cent Friday with $103.69/MWh. Off-peak values shot up $16 to $70.27/MWh and $70.32/MWh.

Palo Verde average prime trades ended the week nearly even with Monday at $100.73/MWh, up 66 cents. Off-peak prices rose $19 to $72.94/MWh.

Demand for power on the California grid started the week at 37,800 MW but sank Tuesday and Wednesday. Demand started creeping up Thursday and was expected to reach 38,669 MW Friday, and will likely hover close to that amount over the weekend.

It will be dry and sunny across California this weekend, with highs in the low 60s in San Francisco and the low 80s in Los Angeles. The southern valleys and high desert, including Palm Springs, will bake in triple-digit temperatures, AccuWeather said.

Sunny skies and warm weather are in the forecast for the Northwest. Temperatures should creep into normal ranges, AccuWeather said, with Portland enjoying 70-degree weather this weekend and next week, while Seattle will reach into the upper 60s. The warmer weather was also expected to melt more of the region's snowpack, which would keep reservoir levels high and hydropower cheap.

Overall, this summer should be milder than the last three years and electricity consumption is expected to shrink to more normal levels, according to the U.S. Energy Information Administration's short-term forecast. Demand this year is expected to grow a modest 0.6 percent. Rising coal and natural gas prices are expected to push electricity costs up by 3.7 percent this year and 3.6 percent in 2009 [Kristina Shevory].

Gas Flat on Supplies, Weather

Natural gas prices ignored high crude prices and warm weather this week and generally ended lower. Decreases, however, were limited from 20 to 60 cents/MMBtu. Only Malin's and Pacific Gas & Electric's trading centers saw increases of 9 to 14 cents, respectively. Average prices ranged from $10.26/MMBtu at San Juan to $11.96/MMBtu at PG&E's CityGate.

Last month, Henry Hub natural gas prices, considered the national benchmark, averaged $7.17/Mcf. The U.S. Energy Information Administration, in its latest short-term energy outlook, predicts they will remain at an average of $11/Mcf in 2008 and 2009. Blame for higher prices can be chalked up to higher consumption, low imports of liquefied natural gas and a decline in inventories, but on a positive note, U.S. gas production is expected to increase 6 percent this year and 1.5 percent in 2009 thanks to a boom in onshore and gulf drilling.

Warm weather across much of the country last week limited the amount of natural gas that operators put into storage. There was 80 Bcf of natural gas placed into storage nationwide, boosting the total to 1.886 Tcf, the EIA reported. Storage levels now stand 15 percent lower than last year and 1 percent below the five-year average.

In the Western United States, gas in storage rose by 16 Bcf to 267 Bcf, placing supplies 21 percent below last year and 8 percent below the five-year average [K. S.].

Western Electricity Prices
Week's End: June 9 - 13, 2008
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 13.72 - 999.99 7.60 - 95.82
Mid-Columbia 3 - 65.50 -10 - 20
COB 60 - 82.25 8 - 35
NP 15 95 - 129 48.75 - 74.50
SP 15 94.75 - 125 48.50 - 75
Palo Verde 89 - 125.25 43 - 80

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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