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Western Price Survey

June 23, 2006
Power Prices Jump with the Weather

The cost for power on the wholesale spot market this week reflected the demand for electricity and the bump up in natural gas prices.

On Monday the price for peak power ranged from 63 mills to 68 mills/KWh in the North of Path 15 region. The pressure of increasing temperatures pushed the price up to between 68.25 mills and 73.25 mills/KWh by Wednesday. By Friday the price rose as high as 78 mills/KWh. Off-peak power traded for between 18 mills and 26 mills/KWh at the start of the week, steadily escalating to a range of 47 mills to 51 mills/KWh by the end of the week.

South of Path 15 daytime power moved for between 63.50 mills and 71.25 mills/KWh on Monday, exhibiting the typical spread between prices in that region compared to NP15 power. The cost of peak-time power was reported to be between 68 mills and 79 mills/KWh on Friday. On the nighttime side of the balance sheet, power in SP15 moved for between 19.75 mills and 26.75 mills/KWh on Monday, swelled to between 27 mills and 39 mills the following day and leveled off at that range through Thursday. Next-week power traded on Friday cost as much as 50 mills/KWh.

Southwest peak power opened the week trading for between 70 mills and 74 mills/KWh at the Palo Verde hub, but shed a few mills on Tuesday. On Wednesday the price edged up a bit, closing out at between 70.75 mills and 75.50 mills/KWh. That range held steady until Friday, when power at PV attracted between 73 mills and 80 mills/KWh. Off-peak power values at Palo Verde remained in line with California off-peak prices during the first half of this week. A low of 25 mills/KWh was recorded on Monday. The price for low-demand power scooted up to a range of 31 mills to 35 mills/KWh on Tuesday before moving up to a high of 39 mills/KWh the next day. By the end of the week, nighttime power at PV outpaced West Coast costs, trading for as much as 53.75 mills/KWh.

Arizona Public Service expects repairs to be completed as planned on Unit No. 1 of the Palo Verde Nuclear Generating Station around the end of the month in time for peak power consumption, said spokesperson Alan Bunnell. The 1,270 MW unit was run at reduced power levels in late December after APS became concerned about vibration on one of the shutdown cooling lines. After trying several approaches to resolve the problem, APS decided to move a 7,000-pound valve closer to a cooling line intersecting with the reactor coolant system line. Since mid March, the company has had the unit shut down completely for repairs.

The California-Oregon border price for peak power held steady at between 44 mills and 55 mills/KWh during the first two days of the week. Wednesday and Thursday power drew as much as 63 mills/KWh before tacking on another 8 mills during Friday's trading session. Off-peak power moved for between 12 mills and 45 mills/KWh at the hub.

The price for high-demand power at the Mid-Columbia trading post moved from a low range of 34.75 mills to 40 mills/KWh at the beginning of the week, all the way up to between 59.75 mills and 65.60 mills/KWh on Friday. Low-demand power cost as little as 5 mills/KWh on Monday, but by the end of the week the value had soared to between 31 mills and 40 mills/KWh [Shauna O'Donnell].

Sinking Gas Unimpressed by Heat

Natural gas prices received a boost at the start of the week, invigorated by a bump up in the price of oil. Both receipt points into California as well as producing basin gas attracted more than $6/MMBtu. By the end of the week the cost of spot gas in the West had slipped back down to the range it occupied during the past two weeks.

After hitting $6.35/MMBtu in Monday's trading session, Permian Basin gas moved for between $5.50 and $5.60/MMBtu on Friday. Southern California border gas entering the state at Topock hit a low of $5.51/MMBtu at the end of the week. On Monday, Topock gas traded for between $6.23 and $6.36/MMBtu.

El Paso Corporation's Western Pipeline Group is developing a much-needed underground natural gas storage facility in central Arizona. Announced on Thursday, the project would be housed in salt caverns about 40 miles southeast of Phoenix. When completed, the facility will have storage capacity of 3.5 Bcf and be capable of sending out 350 Mcf per day.

Western Pipeline plans to develop the storage facility in stages, with the first salt cavern ready to house gas by mid-2010. The other three caverns would be placed into service by 2012. The company will file an application with the Federal Energy Regulatory Commission for approval of the project late next year, with an eye to starting construction in 2008 [S. O'D.].

Western Electricity Prices
June 19 - 23, 2006
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 10.13-998.78 8.08-80.40
Mid-Columbia 34.75-65.50 5.5-40
COB 44-71 12-45
NP 15 58.90-78 18-40.51
SP 15 62.25-79 19.75-50
Palo Verde 67.50-80 25-53.75

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 Shauna O'Donnell, editor with questions regarding Price Survey Content.

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