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Western Price Survey

Week's End Edition
September 18, 2009
Natural Gas Returns From Abyss; California Power Prices Trade High

This might be the end of the commodities recession.

The U.S. Energy Information Administration reported Wednesday that "some positive economic news suggested that demand for energy commodities may be recovering," including reports from the U.S. Department of Commerce showing improved retail sales and a report from the Federal Reserve showing improved levels of industrial production.

"While many spot prices for natural gas are still trading at roughly half of their levels at this time last year, significant price increases this report week suggest that the year-long trend of declining prices may be coming to an end," the EIA stated.

For the week ending Wednesday, the EIA reported that natural gas spot prices increased sharply. The Henry Hub spot price rose 56 cents to $3.28/MMBtu, and NYMEX future prices are now $1/MMBtu above lows in early September.

By Friday, Henry Hub spot prices were $3.21/ MMBtu.

Storage, however, is still healthy. Operators tucked 66 Bcf of natural gas into underground storage caverns last week, bringing supplies to 3.458 Tcf, or 16.7 percent more than last year and 16.4 percent greater than the five-year average, according to the EIA.

Western stockpiles came in at 472 Bcf, up 10 Bcf over last week. Inventories now exceed last year's by 18.9 percent and the five-year average by 18 percent.

Higher natural gas prices in the West -- moving close to $4/MMBtu at the Southern California border (see chart) -- plus hotter weather may have provided support for power prices, which moved past $50/MWh at some Western hubs.

California daytime prices climbed $7 to average $47.50/MWh at North of Path 15, and $44.67 at South of Path 15 -- a level they have not reached since January. Nighttime trades clocked in a $7 rise in the south to average $31.95/MWh. In the north, no off-peak price was reported on Friday, but through Thursday, off-peak trades were up less than $1 to $28.47/MWh.

Prime Palo Verde trades rose almost $10 to average $36.50/MWh, while off-prime values increased more than $8 to $27.03.

Dry brush, low humidity and scorching temperatures will make firefighters' jobs tougher this weekend. Outside Los Angeles, fire crews have contained 93 percent of the Station Fire, according to the California Department of Forestry and Fire Protection. The fire has consumed more than 160,000 acres since it started nearly a month ago.

As the weather warmed across the Golden State this week, power demand crept up, starting off the week at a high of 31,400 MW and closing out Thursday at 38,900 MW, according to the California Independent System Operator. On Friday, top usage is expected to hit 40,700 MW.

Cool air moving into the Northwest will drive temperatures down this weekend in the Northwest, but a wave is on the way beginning Monday.

At the California-Oregon border, prime trades crept up less than $1 to average $43.50/MWh. Nighttime power advanced more than $4 to an average of $31.57.

Average Mid-Columbia peak prices dipped about $1.50 to $40.04/MWh, while off-peak trades inched up nearly $3 to average $29.65.

The San Onofre Nuclear Generating Station's 1,070 MW second unit returned to nearly full power on Friday following a shutdown on Monday after a condenser vacuum went off line, tripping the turbine and reactor. Diablo Canyon's 1,138 MW second unit has been limping along at 80 percent capacity for well over two weeks while its steam valve is being replaced. The unit is scheduled to return to full capacity in the fall [Kristina Shevory].

Western Electricity Prices
Week's End: September 14 - 18, 2009
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 15.49-999.99 11-39.29
Mid-Columbia 38.50-50 25.25-33
COB 41.50-49.50 25.25-34.50
NP 15* 40-48.05 27.50-30.50
SP 15* 36.50-50 24.50-32.25
Palo Verde 24-37.25 15-27.50

* 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.

Please contact with questions or comments about this site.

Contact Chris Raphael, editor with questions regarding Price Survey Content.

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