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Western Price Survey

Week's End Edition
June 19, 2009
Power Prices Diverge on Weather

Electricity prices veered in separate directions late this week, with snowmelt driving Northwest prices down and warm weather slightly boosting California and Southwest trades. A shift in the jet stream this week brought showers and cooler temperatures to the Northwest and warmer weather to California and the desert Southwest.

However, cheap natural gas prices, available hydropower and the economic recession continue to keep power prices historically low throughout the West.

In the Northwest through Wednesday, daytime prices had posted gains on warmer weather, climbing to a peak of $28/MWh at the California-Oregon border and $26.50/MWh at the Mid-Columbia hub. But those increases were reversed on Thursday.

For the week, average Mid-Columbia prime values lost $5 to $19.47 while off-prime prices slipped $6 to an average of $13.22. Peak prices at the California-Oregon border, meanwhile, lost over $4 to average $22.62/MWh. Nighttime deliveries fell $5 to average $15.54.

Hydropower is still producing low prices in the West; off-peak power traded at a low of $7.75/MWh in Mid-C this week.

In the Golden State, peak electricity usage steadily climbed this week from 29,500 MW on Monday to 34,900 MW on Thursday, and was expected to hit 36,400 MW on Friday, the California Independent System Operator said. For the weekend, power demand is projected to fall to 29,500 MW on Saturday and 27,600 MW on Sunday.

California prices made marginal gains. Daytime prices added $1 to close Friday at an average of $30/MWh at North of Path 15 and South of Path 15. Nighttime values added nearly $2, settling Friday at an average of $21.98/MWh in the north and $20.48 in the south.

Prime Palo Verde power gained almost $4 this week to $31.56/MWh. Off-prime prices ended the week at an average of $22.34/MWh, up $4.

Still, electricity prices remain low compared to last year, when power at some Western hubs went for more than $100/MWh and natural gas traded for more than $10/MMBtu.

Working natural gas in storage climbed by 114 Bcf to 2.557 Tcf last week -- the fifth week in a row that weekly injections topped 100 Bcf -- thanks to moderate weather and lower electricity generation, according to the U.S. Energy Information Administration. Inventories, which now stand 32.1 percent higher than last year and 22.6 percent bigger than the five-year average, are poised to break the all-time record of 2.617 Tcf set last June.

Western natural gas in storage rose by 13 Bcf to 408 Bcf, and now stands 47.3 percent above last year and 33.3 percent above the five-year average.

New supplies of natural gas across the country sparked a drilling boom over the last few years, but have now resulted in a glut. Lower electricity demand, along with the storage overhang, has resulted in cheap natural gas.

Higher prices for winter delivery contracts versus spot prices have also contributed to the boost in storage. When future prices are higher, energy companies have more of an incentive to tuck away natural gas rather than sell it.

Last July, natural gas contracts on the Nymex were trading around $13, but have plunged since then. On Friday, Henry Hub futures traded for about $4/MMBtu while spot gas went for $4.51.

Last week, natural gas rigs in operation posted a positive increase for the first time since February, rising by seven rigs to 692, according to Houston oilfield services firm Baker Hughes. The increase, however, is likely a fluke, and the number of working rigs nationwide will likely continue dropping.

One-third of the Columbia Generating Station's reactor core fuel assemblies are being replaced; the project is expected to be completed later this month. The 1,150 MW facility in Washington state has been off line since Mother's Day [Kristina Shevory].

Western Electricity Prices
Week's End: June 15 - 19, 2009
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 14.19-226.57 8-37.05
Mid-Columbia 18.50-26.50 7.75-21
COB 22-28 10.50-22
NP 15* 28-34.50 14.50-23.25
SP 15* 27-33.25 13.50-21.50
Palo Verde 27.25-34.50 14-22.75

* 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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