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Western Price Survey

September 2, 2005
Power Prices Swell with Gas Costs; Labor Day Holiday Eases Pressure

As might be expected, power prices in the West scooted up early this week in response to both warmer weather and the increase in natural gas prices. Gas prices shot up over the weekend on account of the devastation wrought in Gulf Coast states and waters by Hurricane Katrina. Western natural gas was trading for between $9.50 and $10.35/MMBtu on the daily spot market this week.

The general trading pattern for electricity was also skewed this week by next Monday's Labor Day holiday, when no trading will occur. Power transactions conducted on Wednesday this week were for supplies to be delivered Friday and Saturday, while packages dealt on Thursday were sched-uled for Sunday and Monday delivery. Typically, power for those two days of the week are traded on Friday. End-of-week exchanges were penciled in for next-Tuesday delivery.

North of Path 15 peak-power costs were driven as high as 102.25 mills/KWh on Tuesday before dropping to just under the century mark at midweek. By Friday the cost of daytime power had slipped to between 93 mills and 97 mills/KWh. Around-the-clock supplies for weekend delivery ranged from 70.25 mills to 80 mills/KWh.

Off-peak power at NP15 opened the week trading for between 66.50 mills and 72.50 mills/KWh. At the end of the week the high-end price lost ground, with the spread drop-ping to between 64 mills and 65.50 mills/KWh.

SP15 power traded for close to the same price as its Northern California counterpart, opening the week between 99 mills and 103 mills/KWh. That price range held for much of the week. ATC power in Southern California attracted between 70 mills and 81 mills/KWh. Off-peak power at SP15 drew a high of 73 mills/KWh at the start of the week, shedding a couple of mills in subsequent days. The bottom fell out on Friday, when nighttime power costs skidded to between 59 mills and 66 mills/KWh for next-Tuesday deliveries.

Southwest power costs did their best to keep up with California prices. At the Palo Verde hub, the price of peak power topped out at 100.50 mills/KWh on Monday before dropping to between 92 mills and 97.25 mills/KWh at midweek. With slightly cooler temperatures expected in the region early next week, the peak-power cost for next-week deliveries settled at between 87 mills and 92.50 mills/KWh. Off-peak power at PV stayed in the mid-sixties much of the week, only dropping down to 58.50 mills/KWh on Friday.

At the California-Oregon border the price for daytime power ranged from 90.50 mills to 97 mills/KWh during the early part of the week. The price slipped to 84 mills/KWh on Friday. Weekend deliveries at COB attracted between 73 mills and 79 mills/KWh.

Power packages traded at Mid-Columbia changed hands for as much as 96 mills/KWh on Tuesday before weakening to between 87 mills and 90 mills/KWh the following day. ATC power supplies at Mid-C moved for as much as 75 mills/KWh in Thursday's trading session [Shauna O'Donnell].

Katrina Pressures Western Gas

With some analysts forecasting $15/MMBtu natural gas by the end of the year, this week's prices hold some appeal. The damage wrought by Hurricane Katrina forced the cost of gas on the Western spot market into the $9 range at the producing basin at San Juan and as high as $10.35/MMBtu at the Permian Basin.

The price at the Southern California delivery point of Topock ranged from a low of $9.10/MMBtu at the end of the week to a high of $10.12/MMBtu on Wednesday. PG&E CityGate gas opened the week between $9.57 and $9.825/MMBtu before topping out at $10.23/MMBtu at midweek. Natural gas costs at all Western delivery points and producing basins scooted down at the end of the week as some semblance of damage control, if not normality, returned to Gulf Coast oil- and gas-drilling and production facilities.

The Energy Information Administration this week summed up the devastation in energy-production and price terms in its Natural Gas Weekly Update on Thursday. According to the EIA, the spot price at Henry Hub increased by $2.70/MMBtu for the week, topping out at $12.70/MMBtu. On the New York Mercantile Exchange, the final settlement for September deliveries of natural gas closed at $10.847/MMBtu on Monday.

Plenty of natural gas remained shut in by the hurricane. At midweek, 8.35 Bcf per day of production was shut in, bringing the cumulative total since last Friday to 34 Bcf [S. O'D.].

Western Electricity Prices
Aug. 29 - Sept. 2
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 53.34-431.31 34.85-181.10
Mid-Columbia 79-96 61.75-71
COB 84-97 64-50
NP 15 93-103.25 64-72.50
SP 15 93.50-103 59-73
Palo Verde 87-100.50 58.50-68

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 Shauna O'Donnell, editor with questions regarding Price Survey Content.

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