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Western Price Survey

Week's End Edition
September 11, 2009
Power Prices Return from Vacation, Rise on Higher Demand

Western electricity prices roared back after the long holiday weekend, boosted in part by hot weather and higher demand across much of the region. Price increases were as high as $12/MWh at one hub, with other hubs around the region reflecting increases from $4 to $10/MWh. The markets were closed Monday for Labor Day.

Power demand steadily climbed from 32,200 MW on Monday to the week's high of 41,500 MW on Thursday, and was on track to rise even higher to 42,700 MW on Friday, according to the California Independent System Operator.

The weather also warmed across the West this week, pushing temperatures into the 80s in San Francisco and Seattle, and the 90s in Los Angeles and Portland.

Since Monday, California daytime prices added $4-$5 to reach $39.33/MWh at North of Path 15 and $36.44 at South of Path 15. Average nighttime trades clocked in a $10 rise to $31.99/MWh in the north, and a $9 jump to $27.87 in the south.

Palo Verde peak values increased nearly $5 to $30.62/MWh, and $9 to $24.64 for off-peak prices.

High pressure over California will weaken this weekend, allowing cooler air to flow in, which will help firefighters battle the state's biggest blaze. The Station Fire north of Los Angeles is now 77 percent contained after burning more than 250 square miles and destroying and damaging over 200 structures, according to the California Department of Forestry and Fire Protection. More than two weeks after an unknown person started the fire in the Angeles National Forest, the fire has now become the 10th largest fire in California since 1933.

The Northwest will get a break from the heat this weekend as well. Portland wil say goodbye to temperatures in the low 90s in exchange for weather in the low 80s. Seattle will also see cooler weather, with a drop of 10 degrees to the low 70s.

Since Monday, Mid-Columbia peak prices rose almost $9 to an average of $42.14, while off-prime values shot up $12 to $30.82. California-Oregon border values closely tracked Mid-C (see chart).

Despite the jump in electricity prices across the West this week average prices remain historically depressed because of slack energy demand in the recession and low natural gas prices.

Working natural gas in storage climbed to 3.392 Tcf, up 69 Bcf, last week, according to the U.S. Energy Information Administration. Supplies are 17.1 percent above last year, and 17.4 percent greater than the five-year average. At the end of August, storage levels came in at 3.353 Tcf, besting the previous August record of 3.071 Tcf set 19 years ago.

Western stockpiles showed a meager uptick of 1 Bcf last week to 462 Bcf and now stand 19.7 percent higher than the same period last year and 18.5 percent greater than the five-year average.

Diablo Canyon's second 1,138-MW unit is operating at 80 percent capacity while its steam valve is being replaced. The Columbia Generating Station has been running at 85 percent capacity since Tuesday when vibrations in a booster pump were discovered. The 1,150-MW plant will return to full capacity when the issue is resolved.

What's Ahead: Natural gas prices are expected to continue their trek southward as inventories rise and the recession continues. In October, Henry Hub prices are projected to average $2.32/Mcf -- the lowest monthly average since Sept. 2001, according to the U.S. Energy Information Administration's short-term monthly outlook.

When the injection season ends on Halloween, supplies are projected to hit a record high of more than 3.840 Tcf. Drilling has slowed down nationwide, but not enough to offset brimming supplies. Production is slated to rise by 0.9 percent this year, the EIA said.

Americans will use 2.4 percent less natural gas this year and consumption is expected to remain flat next year. But utilities will use 4.3 percent more as natural gas becomes cheaper than coal [Kristina Shevory].

Western Electricity Prices
Week's End: September 7 - 11, 2009
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 11.61-62.71 7.56-30.93
Mid-Columbia 31.25-43.50 17.50-32
COB 35-44.50 18.50-31
NP 15* 33.25-39.50 20.50-32
SP 15* 31-37 17.50-28.10
Palo Verde 25.25-31.50 15.25-25

* 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.

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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