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Western Price Survey

Week's End Edition
June 26, 2009
Power Prices Rise on Heat

Electricity prices rose at the end of the week as traders anticipated the usual higher Monday demand pattern and a blast of warm air entered the West.

Warm weather returns to California this weekend. The low-pressure trough that had been keeping the Golden State relatively mild moves on today, and will be replaced by a ridge of high pressure from the Pacific. Temperatures are expected to soar into the triple digits in the Central Valley, and bump up into the 70s and 80s from San Francisco north to Seattle.

Electricity usage moved from 32,500 MW on Monday to 35,000 MW on Wednesday, the California Independent System Operator said. On Friday, demand was slated to rise to 35,000 MW, and then hit 36,700 MW on Saturday and 36,900 MW on Sunday.

Since Monday, average California peak prices climbed $3 to $35.30/MWh at North of Path 15, and over $2 to $33.17 at South of Path 15. Off-peak values rose $8 to $26.10/MWh in the north and $24.57 in the south.

Daytime Palo Verde values gained $3 this week to average $33.88/MWh on Friday. Nighttime trades ended the week at about $23.75, up $6.

Adding further pressure on prices is that the Northwest snowmelt season is tapering off and providing less cheap hydropower. Since Monday, Mid-Columbia trades for daytime power increased $4 to an average of $25.66/MWh. Nighttime deliveries, which went as low as $8 this week, tacked on $9/MWh to average $20.91 by Friday.

California-Oregon Border prices tended to trade a few dollars higher than Mid-C values (see chart).

Despite the surge in demand and hot weather, electricity prices remain historically low because of reduced electricity use and bargain-basement commodities prices.

Working natural gas in storage rose 94 Bcf to 2.651 Tcf last week, blasting past the previous record set for the end of June of 2.615 Tcf, according to the U.S. Energy Information Administration. Inventories now stand 31.2 percent above last year, and 22.2 percent above the five-year average.

Western natural gas supplies added 12 Bcf to end last week at 420 Bcf, leaving totals 45.8 percent higher than a year ago, and 32.1 percent above the five-year average.

Pipeline companies, distributors and storage operators continue to plow more natural gas into storage because there is such a large financial incentive to do so. July natural gas closed today at $3.84/MMBtu on Nymex, but November and December prices vary from $4.95 to $5.62/MMBtu.

Summer started last weekend, and temperatures quickly rose in the South and Midwest, pressuring natural gas prices on Nymex this week. But plentiful supplies and reduced demand continue to weigh on prices, and many spot prices are trading near six-year lows around the country.

Energy companies have responded to the low values by slashing the number of natural gas rigs in operation from a high of 1,606 in September to 687 this week, the Houston oil field service Baker Hughes reported. Still, the recession and lower demand have largely undercut those efforts and kept prices generally trading below $4/MMBtu. This week, for instance, spot Western prices were relatively flat, trading at most 8 cents lower at the end of the week. Values ranged from $3.06/MMBtu at Malin to $3.32/MMBtu at Pacific Gas & Electric's CityGate.

The Columbia Generating Station in Richland, Wash., returned to service on Sunday and was at 60 percent capacity on Friday after an outage that had lasted since Mother's Day. The 1,150 MW facility was off line while one-third of the fuel assemblies in the reactor core were replaced, a process that takes place every two years [Kristina Shevory].

Western Electricity Prices
Week's End: of June 22 - 26, 2009
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 10.78-56 7.85-27.57
Mid-Columbia 20-27 8-23.50
COB 24-29.25 14.25-22.50
NP 15* 29.50-35.50 16.50-28
SP 15* 28.50-33.55 15.75-26.25
Palo Verde 27-35.25 16.25-25.25

* 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.

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

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