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Western Price Survey

August 31, 2007
Grid Emergency Diverted as Heat Drives Daytime Prices Higher

Heat settled over the West this week, pushing temperatures and demand well above normal starting Tuesday. The California Independent System Operator issued a Stage 1 electrical emergency Wednesday calling for voluntary conservation. Originally expected to run between 3:20 p.m. and 8 p.m., the alert ended early at 5:30 p.m. after conservation reduced load.

Demand was forecast to reach nearly 50,000 MW Thursday, just shy of last summer's record, but a robust response from consumers reduced load by 1,000 MW, with peak demand hitting 47,843 MW at 4:30 p.m.

Conservation Thursday helped California avoid a Stage 1 emergency and allowed the grid operator "to provide limited emergency assistance to neighboring control areas coping with high demand," Cal-ISO Vice President of Operations Jim Detmers said in a Thursday statement.

As demand crept up Friday morning, an ISO "Flex Alert" was in effect and the grid operator was monitoring the situation closely. "We're not out of the woods yet," said Cal-ISO spokesman Gregg Fishman. Hopes were that the beginning of the holiday weekend would ameliorate demand, even though temperatures remained high.

Because of the upcoming Labor Day holiday, traders on Tuesday exchanged power blocks for deliveries Wednesday and Thursday, when temperatures peaked so far. Values traded Tuesday, consequentially, were the week's highest.

Prices for Wednesday's trades, which deliver Friday, dipped after weather forecasts predicted temperatures would ease over the weekend.

If you looked only at the beginning and ending prices for the week, you'd think it was an uneventful one, as peak prices tended either to even out or dip slightly.

South of Path 15 peak prices soared to $120/MWh Tuesday, up from an average of $64 Monday. Wednesday's price averaged $105.65, but retreated to around $65 in Thursday and Friday trading. Off-peak prices stayed below $45/MWh until big moves Thursday and Friday pushed averages close to $50. North of Path 15 peak hit $114.75/MWh Wednesday, settling quickly to end the week lower than Monday's $63.

Daytime power prices at the Palo Verde hub moved higher than anywhere else in the West. Values reached $126.50/MWh Tuesday before slipping nearly $10/MWh Wednesday and falling to around $65 Thursday and Friday. Nighttime power prices stayed below $40/MWh until Thursday, when values rose nearly $9 to command the week's highest price of $46/MWh.

The cooler climates of the Pacific Northwest didn't spare buyers from pressure on prices. At the California-Oregon border, peak power surged to$103/MWh on Tuesday. At Mid-Columbia, values spiked to $101 in trading Tuesday. Nighttime power prices topped out at $50/MWh at COB and Mid-C [Charles Redell and Alan Mountjoy-Venning].

20-Cent Natural Gas Goes on Sale in Rocky Mountains

Despite the heat, it was a sleeper of a week for natural gas trades. Response to California's electricity challenges was only faintly apparent as traders faced the same bearish trends that have dominated most of the summer.

A uniform pattern was evident, with Monday's prices the lowest, Wednesday's the highest, and prices ending the week heading lower. Gas prices traded on a holiday schedule, with Friday transactions booked for deliveries over the three-day weekend.

Thursday's storage report seemingly resulted in a big yawn, despite injections that were almost 30 percent below average for the week. Warmer temperatures in five of the seven Census Divisions couldn't ignite prices either. There's just so much gas in storage and in production that prices can't be budged short of a crisis.

If there's a story in Western gas this week, it's most likely in the Rocky Mountain Pool, where Opal gas dipped to 20 cents/MMBtu on Wednesday. Prices averaged below two bucks there until Thursday, but slipped again on Friday. The northern Great Plains and eastern flanks of the Rockies were relatively cool, so the excess of new supply there went begging [A. M-V.].

Western Electricity Prices
Week's End: August 27 - 31, 2007
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 23.05-97.35 2.01-44.30
Mid-Columbia 52-101 37-50
COB 62-103 39-50
NP 15 63-114.75 38-53
SP 15 60-120 38-52.50
Palo Verde 60-126.50 32.25-46

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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