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Western Price Survey

June 17, 2016
Prices Soar as CAISO Braces for Heat

The California Independent System Operator is preparing for searing temperatures across California next week, with anticipated highs not seen in more than a decade.

In response to the heat forecast, average Western daytime power prices jumped by $15.60 and as much as $43.10 between June 16 and 17. At the close of trading on Friday, Palo Verde peak led the pack with an average price of $64.95/MWh (see charts).

Forecasters expect the most intense heat on June 20 and 21 and at a level on par with the heat waves of June 2008 or 2013, according to the National Weather Service. Downtown Los Angeles, for example, should see 101 °F Monday, with Redlands expected to climb to 109 °F. Fresno anticipates temperatures of 105 °F on Tuesday.

CAISO says it seeks "to mitigate any potential reliability issues" related to Aliso Canyon, which is used to supply natural gas for electric generation in Southern California. A methane leak led to a moratorium on gas injections at Aliso.

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"We are confident we have a strong plan in place to meet the operational challenges posed by the upcoming hot temperatures," said Steve Berberich, CAISO CEO, in a news release. The grid operator is reminding consumers to conserve power, and may issue a Flex Alert.

Power demand is expected to surpass 46,000 MW during the two-day-long heat wave. Last year, summer peak demand was 47,358 MW and the all-time high of 50,270 MW was recorded in July 2006.

Working natural gas in storage was 3,041 Bcf as of June 10, according to U.S. Energy Information Administration estimates. This is a net increase of 69 Bcf compared to the previous week. Storage levels are now 26.3 percent greater than a year ago and 30.1 percent greater than the five-year average.

Western natural gas values moved higher as well. Average prices rose between 20 cents and as much as 53 cents over the Thursday-to-Thursday trading period. Sumas posted the greatest gains, adding 53 cents to end at $1.83/MMBtu.

Demand peaked on the CAISO grid at 30,851 MW on June 10, which was the high for the June 10-16 period. Total renewables production on the CAISO grid reached 13,152 MW on June 14 [Linda Dailey Paulson].

Archives of the Western Price Survey for the past year are also available online.


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

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