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Western Price Survey

Week's End Edition
September 12, 2008
Power Prices Mixed on Hurricanes to the East, Hot Temperatures in West

After seesawing between Hurricane Ike's changing course and rising power demand, electricity prices got a boost Friday on projections of warmer temperatures and the usual higher Monday demand. However, not all trading centers cleared prices set earlier in the week.

Temperatures will creep up across California this weekend, with temperatures reaching into the low 70s and 80s in San Francisco and Los Angeles, according to AccuWeather. Thunderstorms in the state deserts will move into the Southwest.

Average California daytime power prices spent the week falling slowly until they climbed around $10 on Friday. For the week, however, average prices lost around $1, finishing at $70/MWh for North of Path 15 and South of Path 15. Nighttime prices jumped up $7 on average for the week, reaching around $55 in both areas of the state.

Power usage in California fell from a high of 39,600 MW on Monday to 35,000 MW on Thursday as temperatures grew cooler. Demand is expected to rise to around 36,000 MW this weekend, according to the California Independent System Operator.

Phoenix and the Four Corners areas are expecting rain from Tropical Storm Lowell as it moves across Mexico. Temperatures in Phoenix will bob around 100 degrees this weekend. Palo Verde average peak prices lost $4 to settle the week at $57.10/MWh. Off-peak average prices staged a $7 rally Friday, leaving power values about $4 higher compared to Monday levels.

Sunny skies and hotter temperatures will visit the Northwest this weekend, with highs of 77 degrees in Seattle and 86 degrees in Portland. The Mid-Columbia trading center saw average peak trades inch up by $1 to $61.07/MWh. Off-peak average trades settled at $55.44/MWh, up $7, most of which was added Friday.

Prime trades at the California-Oregon border increased 50 cents to an average of $68.14/MWh. Average nighttime deliveries rose $8 to $57.19/MWh, adding $7 on Friday.

San Onofre Nuclear Generating Station's Unit No. 3 started ramping up and was at 18 percent capacity on Friday. The 1,080 MW unit was shut down Sept. 1 for unplanned maintenance to its backup generator [Kristina Shevory].

Natural Gas Prices Defy Hurricanes, Higher Spot Prices

Natural gas prices flip-flopped this week, soaring through Wednesday as Hurricane Ike strengthened and threat-ened to come ashore near Houston. Nearly all of the Gulf of Mexico's natural gas production is offline in preparation for the storm.

As Ike approached, the Henry Hub futures price of natural gas rose by $2 on Friday to $7.41/MMBtu while spot prices ascended 11 cents to $7.76.

Curiously, however, natural gas values in the West ended the week on average 50 cents to 60 cents lower. Average prices ranged from $5.18/MMBtu at San Juan to $6.59/MMBtu at Pacific Gas & Electric's City Gate.

One possible reason is that Friday natural gas trades are normally for the lower-demand weekend. Another clue lies in U.S. natural gas storage, which rose last week by 58 Bcf to 2.905 Tcf, according to the U.S. Energy Informa-tion Administration. Storage is 2.9 percent above the five-year average, but 4.8 percent below last year's levels.

Last year, the Henry Hub natural gas spot price averaged $7.17/Mcf, but it's expected to climb to $9.70/Mcf this year. However, next year the price will dip to $8.55/Mcf in 2009, according to the EIA's short-term energy outlook. Nearly 3 percent more natural gas will be used this year, and 2.2 percent more in 2009 thanks to increased residential, power and commercial uses. However, domestic production in Texas and Wyoming is likely to help keep supplies high enough to meet demand. Total U.S. marketed natural gas production is expected to increase by 7.8 percent in 2008 and by 3.8 percent in 2009. The increase in lower-48 production has more than offset the year-over-year decline of almost 3 percent during the first half of 2008 in Federal Gulf of Mexico production, the EIA stated [K. S.].

Western Electricity Prices
Week's End: September 8 - 12, 2008
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 14.16-500 7.60-41.09
Mid-Columbia 54.75-66 45-58
COB 61-70 47.50-60.50
NP 15 64.70-72 44.25-56.25
SP 15 64.50-73 46-56
Palo Verde 54.75-62 35.75-46.25

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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