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Western Price Survey

Week's End Edition
August 22, 2008
Demand, Nuke Outages Give Power Prices Weekend Lift

The commodities market again decelerated this week, enough to bring electricity prices along for the ride, but rising grid demand along with the outage of two nuclear reactors made power values pick up speed Friday.

Natural gas prices started off the week strong, with PG&E's City Gate breaking the $8/MMBtu mark on Wednesday. By Friday, however, gas values had fallen, losing more than 30 cents/MMBtu on average at some key Western hubs.

Electricity prices did not track natural gas at all this week, and one culprit is the peculiarities of grid demand and generation. The California Independent System Operator reported peak demand dropped 2,000 MW to 36,600 MW on Tuesday, which could explain the mid-week lull in power prices. Thursday demand, however, was just shy of 40,000 MW and about that level is expected today.

And grid operations were not smooth. On Monday, PG&E reported that the second unit of its Diablo Canyon nuclear power plant shut down after a fire that began shortly around midnight Sunday damaged a transformer. The 1,118 MW unit was not operating today, according to the U.S. Nuclear Regulatory Commission. PG&E stated that the fire was extinguished in 25 minutes and it did not affect the nuclear portion of the facility. The second unit will remain shut down while the utility conducts test on the transformer to determine what caused the blaze.

Then on Thursday, as traders were anticipating the usual uptick in Friday trading values for the higher demand Monday electricity package, another nuclear plant went out -- the 1,150MW Columbia Generating Station -- when sensors detected low oil pressure. The plant was not operating today either, according to the NRC.

By Wednesday, North of Path 15 peak prices lost around $3 to average $75/MWh Wednesday for daytime juice. But prices reached a high of $95 on Friday for peak power. Off-prime power also picked up around $10, most of it in Friday trading, and went for an average of $67.58 Friday. South of Path 15 prices were nearly identical.

Prime electricity at Palo Verde wobbled throughout the week but finished at an average of $78, a gain of about $6 since Monday. Nighttime deliveries traded for around $64 Friday, a whopping gain of $16 over the five-day trading week.

In the Northwest, Mid-Columbia peak prices dropped about $8/MWh from Monday to Thursday only to recover $7 in Friday trading. Off-peak values finished the week flat at an average of $57 after riding the same seesaw.

Price movements were nearly similar at the California-Oregon border, where daytime prices shot up $9/MWh on Friday after having divested about the same amount over the previous four days. Nighttime power also ascended Friday, about $10, and went for an average of $63, chalking up a gain of about $6 for the week [Chris Raphael].

Gas Prices Slip on Storage, Cool Weather From Tropical Storm Fay

Natural gas storage grew by 88 Bcf last week, the U.S. Energy Information Administration reported. Storage in the West picked up 5 Bcf to remain just 0.5 percent below the five-year average but 11 percent below last year's stocks. National storage, however, is 1 percent above the five-year average -- the first it has occurred since May.

In the West, natural gas prices fell by about 5 cents on average at the Southern California Border. The PG&E City Gate price dropped to an average of $7.86/MMBtu after trading above $8 Wednesday, and Permian Basin gas lost more than 50 cents/MMBtu from a Wednesday high of $7.29.

In its weekly report, the EIA attributed price declines from Aug.13-20 to the dampening of space cooling demand in Florida from Tropical Storm Fay. The storm was also only a limited threat to offshore production areas.

Natural gas prices fell further on Thursday and Friday, as the Henry Hub spot price shed 5 cents to below $8/MMBtu. Starting Aug. 15, the hub fell to below $8 for the first time since February. Natural gas prices have recently been following crude oil lower [C. R.].

Western Electricity Prices
Week's End: August 18 - 22, 2008
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 13.28-416.96 14.26-57.63
Mid-Columbia 61-72 48.25-62
COB 66.75-83.50 49-66
NP 15 70.75-95.05 51.25-75
SP 15 71-95.10 51-72.50
Palo Verde 68.50-97 45-67

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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