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Western Price Survey

Week's End Edition
August 21, 2009
Exit Heat, Enter Lower Power Prices

Cooler weather iced electricity demand in the West this week and sent prices down by as much as $9/MWh. The Northwest had the biggest price declines after a heat wave finally exited the area on Thursday.

Average prime Mid-Columbia trades tumbled $9 to $34.61/MWh, while nighttime power slumped over $5 to $26.69. Prices at the California-Oregon border were just a bit higher than in Mid-C (see chart).

Meanwhile, in California daytime prices lost $4 to settle around $33/MWh at North of Path 15 and South of Path 15. Nighttime power, which barely moved, finished the week at an average of $25.81/MWh in the north and $24.12 in the south. The California fire season officially starts Sept. 1, though firefighters have already battled one big blaze. The Lockheed fire north of Santa Cruz has been 90 percent contained, and is expected to be fully extinguished by Saturday. Since the fire started last week, nearly 7,600 acres have burned, 13 outbuildings were destroyed and one building was damaged. The cause of the fire has not yet been determined, but was likely caused by humans since there haven't been any lightning strikes in the area.

Demand for power this week was relatively low in the Golden State. Peak usage was 36,500 MW on Thursday, according to the California Independent System Operator, and was expected to pop up to 38,000 MW on Friday.

In the natural gas markets, storage and pipeline operators tucked away 52 Bcf of natural gas across the country last week, bringing inventories to 3.2 Tcf, the Energy Information Administration reported. The weekly injection was the smallest since mid-April as the weather warmed across much of the United States and demand picked up at electric utilities. Inventories exceed last year by 21.3 percent, and the five-year average by 19.1 percent.

Storage in the West rose to 449 Bcf, up 5 Bcf, and now stands 24 percent higher than a year ago, and 20.1 percent greater than the five-year average.

The supply overhang and lackluster demand have kept natural gas prices low this year. On Friday, natural gas for September delivery sank to a new seven-year low of $2.80/MMBtu after starting the week at $3.16/MMBtu. The drop in natural gas prices came despite oil prices rising Friday to $74.20 for October delivery, their highest level this year.

Last year, during the height of commodities inflation, natural gas prices rose alongside oil. Now the different trajectories of oil and natural gas are perhaps confirming that the fuels are subject to different supply-and-demand economics. The EIA had reported oil in storage fell by 8.4 billion barrels in the previous week, and oil traders took that as a positive sign.

And despite high storage for natural gas, some energy companies have been returning rigs to operation. This week, the number of working natural gas rigs increased by 7 to 695, according to oil-field services firm Baker Hughes. Some drillers have become optimistic in the last month that an economic recovery is on its way and prices will start to rebound.

Units at two of the major Western nuclear plants remain sidelined this week. North of San Luis Obispo, Calif., the Diablo Canyon facility shuttered its second 1,138 MW unit over a week ago to check one of the main components of its transformer system. The Columbia Generating Station in Washington is still offline pending the outcome of an investigation into the cause of a fire, which originated in an overhead tray that carries electrical cables. The 1,150 MW facility has been closed for more than two weeks [Kristina Shevory].

Western Electricity Prices
Week's End: August 17 - 21, 2009
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 13.03-80.73 12.95-30.78
Mid-Columbia 33-45.25 25.75-32.50
COB 36-45 26-33.50
NP 15* 31.50-38.25 23.25-26
SP 15* 31-38 21.50-24.50
Palo Verde 27.50-33.25 19-22.25

* 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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