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Western Price Survey

Week's End Edition
July 2, 2009
Power Flouts Heat, Goes on Holiday

Electricity prices ignored hot weather forecasts and declined ahead of the long holiday weekend. Price drops were more extreme for daytime trades, and ranged from $5 to $10/MWh.

This week, trading has been curtailed because the financial markets are closed on Friday in observance of Independence Day. On Thursday, peak power for Monday was bought and sold.

Hot air from the desert Southwest has gone north and will bake the Northwest for the rest of the week, AccuWeather said. Through July 4, temperatures will remain in the low 90s in Portland and low 80s in Seattle. The California coast, however, will remain cool, with temperatures in the high 60s in San Francisco, and the low 80s in Los Angeles. Phoenix will roast in triple digit temperatures, with thunderstorms making occasional appearances.

California prime trades decreased $8 to $31.04/MWh at North of Path 15, and $7 at South of Path 15 to $30.23/MWh. Nighttime deliveries were off less than $1 in both areas, closing at $24.60/MWh in the north and $23.47 in the south.

Daytime Palo Verde prices gave back $5 to average $31.30/MWh. Nighttime trades settled at $22.79,, down 70 cents.

The Mid-Columbia hub had been blessed with cheap hydropower in June, but this week off-peak power, which went for a low of $21/MWh, began tracking more closely with daytime deliveries, which went for a low of $22/MWh (see chart). California-Oregon Border power tended to trade a few dollars higher than Mid-C.

Demand for electricity fell from 39,400 MW on Monday to 37,600 MW on Wednesday, the California Independent System Operator said, and was projected to slip to 37,300 MW on Thursday. As the holiday weekend begins, usage is expected to decline to 34,400 MW on Friday and 33,000 MW on Saturday.

Overall electricity prices remain depressed as the recession cuts energy demand and natural gas use.

Natural gas output has steadily declined this year as energy companies close rigs in response to lower demand and reduced prices. Rigs in operation across the country have plunged since hitting a peak of 1,606 in September, and are now at 688 this week, according to Baker Hughes, a Houston oil field services firm.

The U.S. Energy Information Administration predicts natural gas production will drop 1.1 percent this year, and 2.6 percent in 2010.

Low prices and feeble demand continues to drive pipeline and storage operators to tuck more natural gas into storage. With prices for winter delivery running much higher than for summer natural gas, operators have little incentive to sell any of the heating fuel. On Thursday, January natural gas closed at $5.70/MMBtu versus $3.61/MMBtu for August delivery.

Overall, natural gas prices have plummeted 70 percent since the peak of prices last September. Western spot prices lost about 40 cents on average this week, settling at prices ranging from $2.85/MMBtu at Malin to $3.12 at SoCal Topock.

Meanwhile, working natural gas in storage nationwide increased last week by 70 Bcf to 2.721 Tcf -- the first time June inventories have soared past 2.7 Tcf since the Energy Information Administration started collecting figures in 1994. Inventories are now 29.2 percent higher than the same period last year, and 20.7 percent above the five-year average.

Western supplies added 11 Bcf to 431 Bcf, and are 44.6 percent greater than a year ago and 31 percent higher than the five-year average.

At the Columbia Generating Station in Washington state, power was slowly ramping up after operators manually shut down the 1,150 MW facility in response to a fire last Friday night. The plant had been offline since Mother's Day while one third of the fuel assemblies in the reactor core were replaced, and was at 60 percent capacity last Friday when the fire started in the insulation surrounding the plant's turbine system. On Thursday, Columbia was at 24 percent capacity. Meanwhile, the Diablo Canyon Power Plant's third unit remained shuttered after a blown fuse caused a loss of power to its transformer support system. The 1,130 MW unit has been offline since Wednesday [Kristina Shevory].

Western Electricity Prices
Week's End: June 29-July 3, 2009
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 16.25-95.07 13.53-35.44
Mid-Columbia 22-37 21-29.50
COB 24.75-38 23-29.50
NP 15* 30.80-40.50 24.50-26.50
SP 15* 29.90-38.50 23-25
Palo Verde 30.25-39 21.50-24

* 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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