Western Price Survey
September 2, 2016
The Labor Day weekend traditionally signals the end of summer, but weather across the West is more fall-like—a trend expected to continue into the first full week of September.
With temperatures generally below seasonal norms across California and trending lower across the country, energy demand has softened.
Natural gas use during the U.S. Energy Information Administration report week saw total consumption fall 12 percent. There was a 10 percent drop in gas use for power generation, according to the EIA.
Western peak power prices fell between $2.05 and $7.40/MWh over the Friday-to-Friday trading week. Palo Verde posted the greatest loss, down $7.40 to $25.65/MWh (see chart).
Average nighttime power prices at some hubs dropped between $1.60 and $3.35 in the trading period. Prices Sept. 2 ranged from $20.90/MWh at Palo Verde to $30.50 at North of Path 15.
Demand peaked on the CAISO grid at 40,994 MW Aug. 30, which should be the high for the week. Power use is forecast to remain soft until Thursday, Sept. 8, when temperatures should start rising. Demand may reach roughly 37,000 MW that day, according to the grid operator.
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Working natural gas in storage was 3,401 Bcf as of Aug. 26, according to EIA estimates. This is a net increase of 51 Bcf compared to the previous week. Storage levels are now 7.5 percent greater than a year ago and 10.9 percent greater than the five-year average.
Henry Hub gas spot values added 6 cents in Thursday-to-Thursday trading, ending at $2.92/MMBtu Sept. 1.
Western natural gas prices generally rose between 3 and 11 cents, with El Paso-Permian recording an 11-cent increase to $2.70/MMBtu.
The EIA expects some upward price shifts from production shut-ins in the Gulf of Mexico prompted by Tropical Storm Hermine. As of Aug. 31, 360 MMcf/d of natural gas production was shut in.
In August, average natural gas prices were higher compared to the same month last year. The average high price at Henry Hub was $2.91/MMBtu, which was 30 cents higher than in August 2015. Gas prices at Western hubs ranged from 2 cents to 38 cents/MMBtu higher than in August 2015.
Average Western power prices in August were also generally higher when compared with the same month last year, with the increase ranging from around $7/MWh to $21/MWh [Linda Dailey Paulson].
Archives of the Western Price Survey for the past year are also available online.
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