Western Price Survey
Week's End Edition
Peak-power prices are about even with values traded last year at this time; however, the difference in average peak prices compared to levels set five years ago is substantial.
Average power prices now are about $15/MWh to $32/MWh below prices set during the last full week in August 2006. Lower power demand today does not explain the price differential -- Cal-ISO peak demand during the last full weeks in August 2006 and 2011 is about the same, near 42,000 MW -- but natural gas prices do. Natural gas prices throughout the West and for the Henry Hub are about $3/MMBtu lower now compared with five years ago.
This week, Western natural gas prices lost a few cents during the trading period. By Friday, Aug. 26, Southern California Border and Ruby-Malin gas each lost 4 cents over the previous Friday. The hubs closed at $4.09/MMBtu and $3.86/MMBtu, respectively.
Working gas in storage was 2,906 Bcf as of Aug. 19, according to EIA estimates. This represents an increase of 73 Bcf from the previous week. Stocks were 140 Bcf less than last year at this time and 55 Bcf less than the five-year average.
In the Friday-to-Friday trading period, Aug. 19 to Aug. 26, here's how average peak-power prices fared:
Nighttime average prices also posted increases between $3.85 and $5.90. Spot prices during the week ranged from roughly $21.50/MWh to $36/MWh (see chart).
What's ahead: Cooler temperatures are expected all along the West Coast the week of Aug. 29. Temperatures should be around the 70s, which is cooler than seasonally normal for cities from Seattle to Los Angeles. Temperatures near Palo Verde should hit 111 °F Monday, staying at triple digits the remainder of the week.
In a seasonal outlook, forecasting firm Weather Services International said Pacific Coast states should see cooler-than-normal temperatures this fall. But warmer-than-normal temperatures elsewhere in the country mean gas inventory levels will likely not rise above last year's record of 3,840 Bcf, according to Chris Kostas, senior power and gas analyst at Energy Security Analysis Inc., whom WSI cited in its outlook.
By November, "heating demand for gas will likely run slightly below normal. Henry Hub natural gas prices can be expected to pick up slightly from October shoulder season level," notes Kostas. "As we enter the winter heating season, we expect that gas prices could also be supported by inventory levels that are slightly lower than those of last year" [Linda Dailey Paulson].
* 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.
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