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Western Price Survey

Week's End Edition
June 15, 2012
California, Northwest Power Prices Take Different Paths

Strong hydropower production in the Northwest continued to drag down power prices in the region, but California prices jumped on higher natural gas values and hot weather.

At Mid-Columbia, off-peak power hit a four-year low of -$15/MWh on Friday, June 15, as hydropower production in the Bonneville Power Administration area surged past 14,000 MW.

Nevertheless, BPA has not had to curtail any wind turbines since early May to deal with the spring runoff, and "the probability of any [curtailment] happening this weekend is low," said BPA spokesman Michael Hansen. To deal with the oversupply, the Columbia Generating Station has periodically ramped down to 85 percent capacity.

Over the June 8 to June 15 trading period, peak power at Mid-C dropped $11 to an average of $2.24, while California-Oregon Border prices shed $10 to about $9/MWh.

In California, however, South of Path 15 peak gained $4 over the trading period, to an average of $38/MWh, while Palo Verde gained $5 to $33/MWh.

Coastal temperatures in the Golden State are near seasonal norms, but central areas have been hot; the Phoenix area is expected to reach 111 °F Monday, which the National Weather Service has considered "excessive" though below the level needing a warning.

With sunny weather, Cal-ISO hit a record on June 8 of 846 MW of peak solar production. That day it also hit a peak wind record of 3,221 MW. Records will continue to be broken, as substantial amounts of new solar and wind are expected to come on line this year and next.

California power prices also tracked a jump in natural gas values, which partially resulted from a lower-than-expected storage build. The U.S. Energy Information Administration reported 2,944 Bcf of natural gas in storage as of June 8, an injection of 67 Bcf versus the previous week. The build was about 8 Bcf lower than consensus, according to Barclays Capital analysts, and indicates that displacement of coal in favor of natural gas generation is running higher than the market's expectation.

Henry Hub spot gas gained on average 23 cents over the trading period to around $2.44/MMBtu Friday. Western hubs generally followed that rise, with average prices at the SoCal Border up 29 cents to around $2.55, and Malin up around 25 cents to $2.29.

What's ahead: All eyes are on the Southern California grid this summer. The San Onofre Nuclear Generating Station will remain off line through August for inspection of abnormal wear on steam-generator tubes. FERC has warned of price volatility in Southern California and Cal-ISO has warned of reliability issues.

Without SONGS, San Diego reserves are only 13 MW if the largest generator in the region goes out and the area experiences heavy load. San Diego has 616 MW of reserves under heavy load conditions and if no large generator goes out. Cal-ISO is also looking to conservation and demand response to provide an additional margin. San Diego Gas & Electric has 100 MW of price-responsive and emergency-triggered DR available, while Southern California Edison has 506 MW of emergency DR and 555 MW of price-responsive DR. Cal-ISO is also promoting its "Flex Alert" campaign this summer [Chris Raphael].

Western Electricity Prices
Week's End: June 11 - 15, 2012
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 7.90-776.25 0-19.79
Mid-Columbia 0-14.25 (-)15-.25
COB 8.50-19 0-9
NP 15* 26-35.50 19.75-26.25
SP 15* 29.50-40 16.50-26.25
Palo Verde 27.50-35.25 15.80-25

* 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.

Please contact with questions or comments about this site.

Contact Chris Raphael, editor with questions regarding Price Survey Content.

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