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Western Price Survey

Week's End Edition
July 24, 2009
Hot Air Lifts Northwest Power Values; California Prices Stay Cool

Electricity demand and temperatures crept higher this week in the West, but price gains across the region were varied.

Spot natural gas provided no direction for power values, as gas prices fell on the week, down about 20 cents/MMBtu at Western hubs.

Peak electricity demand grew from 41,900 MW on Monday to 43,000 MW on Wednesday, and then fell to 41,900 MW on Thursday, the California Independent System Operator said. Usage was projected to reach 40,500 MW on Friday, then fall over the weekend.

California peak electricity prices were nearly flat this week, rising less than 50 cents/MWh to average $44.92/MWh at North of Path 15 and $45.08 at South of Path 15. Off-peak trades gained more ground, advancing $4 to average $31.31/MWh and $30.56 in the south.

Daytime Palo Verde values were the only major prices that fell this week, losing more than $4 to close at an average of $43.60/MWh. Average nighttime prices gained $6 to $31.28/MWh.

The largest blast of heat this weekend is reserved for the Northwest, where temperatures will jump more than 10 degrees to a high of 91 °F in Portland and to 82 degrees in Seattle, according to the National Weather Service. Next week won't bring any relief. Temperatures are expected to keep rising to highs of 99 °F in Portland and 91 °F in Seattle.

At the California-Oregon border, peak prices gained $9 to average $49.35/MWh. Average off-peak values added more than $5 to $36.40.

Mid-Columbia prime values grew nearly $8 to settle at an average of $48.92/MWh. Trades for nighttime power increased $5 to $34.76.

Natural gas prices have staged a minor rebound in recent weeks as glimmers of hope shine in the economy and oil gains ground. Natural gas rigs in operation have increased, too, but it still hasn't been enough to support a full-fledged recovery in energy prices.

The number of natural gas rigs in operation this week rose by 10 to 675, Houston oilfield-services firm Baker Hughes said. But natural gas prices continue to bob around six-year lows between $3 and $4/MMBtu courtesy of reduced industrial demand and lower drilling.

Storage remains robust, even though hot weather and increased cooling demand shaved the natural gas injection last week and made it the smallest addition since the week ended April 17, the U.S. Energy Information Administration reported. Natural gas in underground storage rose by 66 Bcf to 2.952 Tcf last week, leaving inventories 23.8 percent higher than last year's level and 18.4 percent above the five-year average.

Western stockpiles dipped 1 Bcf to 442 Bcf, but still exceed the year-ago and five-year averages by 32.3 percent and 23.5 percent, respectively.

Also, pipeline and storage operators are tucking more natural gas into underground caverns so they can sell the heating fuel during the winter, when prices are higher. On Friday, natural gas for August delivery settled at $3.69/MMBtu, versus $5.41 for December contracts.

Increased shipments of liquefied natural gas have also added to the pressure on prices. More LNG cargoes are coming to the U.S. because demand, once strong in Europe and Asia, has plunged. In the second quarter, shipments averaged 1.3 Bcf/d compared to 0.9 Bcf/d during the second quarter of last year, according to the EIA [Kristina Shevory].

Western Electricity Prices
Week's End: July 20-24, 2009
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 14.40-159.20 13.39-57.02
Mid-Columbia 39.50-56 29.25-38
COB 43.50-51 30.50-38.75
NP 15* 41.50-45.30 26-31.50
SP 15* 42-45.50 25.25-31.50
Palo Verde 42.50-50 22.25-38

* 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.

Please contact with questions or comments about this site.

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

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