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Western Price Survey

Week's End Edition
August 13, 2010
Temperatures Spark Power Prices, Not Natural Gas

Expectations of hotter weather lit a fire under electricity prices throughout the Western U.S. After losing value throughout the week, trades for both daytime and off-peak power posted appreciable gains at the close of Friday trading.

Average daytime prices for all hubs gained value. From the Friday-to-Friday period from Aug. 6 through Aug. 13, Northwest hubs showed the largest gains -- rising $13 and $15/MWh from the previous Friday and trading well above $50/MWh. The California-Oregon Border hub posted the week's high spot price of $57.75/MWh.

North of Path 15 and South of Path 15 average peak prices also jumped by the week's end, although not as dramatically. By Friday, NP15 and SP15 gained between $8 and $9/MWh compared with the previous week and traded for highs of $45 and $48/MWh.

Palo Verde average daytime pricing started the week soft, but picked up $10.85/MWh by Friday to end the week at $31.77/MWh. The hub posted the weakest average prices in the West for daytime and nighttime trades.

Peak demand on the Cal-ISO grid reached the week's high of 35,491 MW Friday at 4 p.m. Future demand may approach 43,500 MW Tuesday, Aug. 17.

According to the U.S. Energy Information Administration, a 37 Bcf addition to natural gas reserves provided a total of 2.985 Tcf in storage as of Aug. 6.

This addition was 24 Bcf less than last year's 63 Bcf injection at this time and the lowest net injection for August since 2007. It is also the eighth week that inventories have been less than the five-year average net injection, though total inventories are just 15 Bcf shy of the 3 Tcf mark and reached that level earlier than in any previous year except 2009.

Hotter weather hasn't buoyed natural gas prices, nor has a spike in demand. Henry Hub spot prices traded at $4.38/MMBtu on Wednesday, Aug. 11, down 39 cents from the preceding Wednesday, according to the EIA. Spot prices traded at an average of $4.35/MMBtu Friday. Futures at the hub Wednesday, Aug. 11 were down 9 percent to $4.33/MMBtu, and traded for the same price on Friday.

The EIA's Short-Term Energy Outlook, released Aug. 10, predicts that nominal production decreases coupled with increased consumption will boost natural gas prices next year. The EIA states that Henry Hub spot-price averages should be $4.98/MMBtu in 2011, though that amount is about 20 cents less than forecast in the last report.

What's ahead: A weekend heat wave throughout portions of the West Coast promises to linger into the work week, particularly in the Pacific Northwest and California's Central Valley. Clear, 90-degree weather should persist in Seattle through at least Tuesday. Oregon should still have highs around the century mark in inland locations through Monday. Meteorologists are uncertain what conditions might be for midweek and beyond for Oregon and Northern California. A marine layer-onshore flow combination is expected to keep coastal California cool. Temperatures in the Los Angeles area are expected to be at or below normal. But the Central Valley is predicted to have temperatures exceeding 100 °F well into Thursday. Bakersfield may hit 109 [Linda Dailey Paulson].

Western Electricity Prices
Week's End: August 9 - 13, 2010
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 22-494.73 17.80-66.93
Mid-Columbia 36.50-56 26-44.50
COB 38.35-57.75 26.25-45
NP 15* 35.90-45.50 27.75-32.60
SP 15* 35.25-48.50 26.50-32
Palo Verde 36-52.25 24.50-32.50

* 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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