Western Price Survey
July 7, 2006
This week's disjointed schedule left power prices uninspired to move much on the peak-time side of the ledger, while the off-peak numbers slipped at midweek on account of cooling weather and a return to trades of one-day packages.
On Monday, off-peak power scheduled for both Tuesday and Wednesday delivery changed hands. Trading did not occur on Tuesday due to the Independence Day holiday.
With a minor drop in temperatures in the Southwest came a slump in wholesale power prices on the spot market. After hitting a high of 72 mills/KWh late last week, Palo Verde peak power drew between 53 mills and 63 mills/KWh at the start of this week. The spread narrowed to a range of 60 mills to 65.50 mills/KWh on Wednesday before easing down to between 54.50 mills and 57.50 mills/KWh in Friday's trading session.
The price for power at Palo Verde is little affected by the continuing outage of the 1,270 MW No. 1 unit at the Palo Verde nuclear power plant. Arizona Public Service has completed repairs to the unit, but has declined to specify a date it would begin generating power again. Unit No. 1 has been shut down or operating at reduced power levels since December 25 because of problems with vibration on a shutdown cooling suction valve.
North of Path 15 peak power changed hands for between 57.75 mills and 62 mills/KWh during the first half of the week. Trades scheduled for weekend delivery lost some ground on Thursday. Peak-time packages dropped to between 51 mills and 55.75 mills/KWh, while off-peak power moved for between 35.35 mills and 38.25 mills/KWh. Off-peak power attracted a high of 49.50 mills/KWh on Monday.
In the South of Path 15 region, daytime power moved for a couple of mills more than NP15 power this week. Trading for between 58.50 mills and 63.50 mills/KWh on Monday, peak power scheduled for Thursday delivery barely moved, trading for between 58.25 mills and 63.25 mills/KWh at midweek. SP15 daytime power closed out the week trading for between 55.50 mills and 58 mills/KWh.
Off-peak power in Southern California attracted as much as 49.75 mills/KWh at the start of the week for around-the-clock deliveries on Tuesday. Packages of off-peak power changed hands for between 36.50 mills and 42 mills/KWh on Wednesday and ratcheted up to as much as 45 mills/KWh at the end of the week.
Daytime power at Mid-Columbia moved for between 44 mills and 49.50 mills/KWh in the first half of the week before losing another 5 mills or so in late-week trading. Nighttime power went from a high of 44.50 mills/KWh on Monday to a low of 28 mills/KWh in Thursday's session.
At the California-Oregon border, power values split the difference between the Mid-C and California prices. COB peak-time power changed hands for between 51.25 mills and 53 mills/KWh at the start of the week and managed to gain about 2 mills in Wednesday's trading session. The upward trend was short-lived, however. Peak power attracted between 44.50 mills and 49 mills/KWh the next day. Off-peak power at COB traded for a high of 46.50 mills/KWh on Monday before dropping to between 35 mills and 36.75 mills/KWh at midweek [Shauna O'Donnell].
Gas Costs Slip. Drivers Wanted
Disregarding the usual tie-in to the price of crude oil, natural gas prices slid this week, in contrast to the rallying cry resonating in the crude oil markets. On the futures market, oil hit a new high of $75.40 per barrel this week, while natural gas for August delivery traded on the New York Mercantile Exchange for as little as $5.75/MMBtu. The primary driver for the weakness in the gas market continues to be weather.
A lack of persistently hot temperatures in the country, coupled with calm weather in the Gulf Coast region, leave sellers with little to work with on the price front. The continuing surplus in stored gas in the nation's underground storage facilities also has helped drive the price of gas downward.
The price of gas in the Western spot markets dropped below the $5 mark across the board this week. Gas changed hands this week at both producing basins and receipt points in the West for as much as $2/MMBtu less than this time last year. And while there are many months remaining to hurricane season, concerns over potential future disruptions in supply are currently not pushing up the price of gas on either the futures or spot markets [S. O'D.].
Archives of the Western Price Survey for the past year are also available online.
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