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Western Price Survey

Week's End Edition
September 19, 2008
Power Prices Fall on Cool Weather, Lower Natural Gas Values

Daytime electricity prices sagged on lower natural gas prices and a blast of cooler air across much of the West while nighttime prices climbed.

Along the California coast, temperatures will remain relatively mild, with San Francisco firmly parked in mid-60-degree weather and Los Angeles seeing temperatures fall into the high 70s. In the Southwest, it will be sunny and warm with highs at 100 degrees in Phoenix.

Power demand in California drifted down from a high of 38,700 MW on Monday to bob around 36,400 MW the remainder of the week, according to the California Independent System Operator. Friday's electricity needs are expected to remain the same before falling to around 34,000 MW this weekend.

In California, prime trades dropped an average of $7 since Monday to settle around $60.62/MWh at North of Path 15 and South of Path 15. Nighttime deliveries rose more than $6 to average $50/MWh at both hubs.

Palo Verde peak prices shed about $1.50 to an average of $54.28/MWh. Average off-peak values shot up over $8 to $44.38/MWh.

The high-pressure zone that had been pushing up temperatures in the West finally moved east as a new Pacific storm system came ashore. Some areas of the Northwest may see thunderstorms as a result, Accu-Weather said. Temperatures in Seattle and Portland were expected to remain in the mid- to high 60s, with a slight chance of rain in Oregon.

At the California-Oregon border, average peak prices shed about $7 to $60.85/MWh. Off-peak prices added nearly $4 to an average of $52.17/MWh.

Since Monday, average Mid-Columbia daytime prices have lost nearly $5 to $56.41/MWh while nighttime prices climbed $3 to $51.73.

Palo Verde Nuclear Generating Station's third unit, which can generate up to 1,247 MW, is expected to return to full power this weekend. The Arizona unit was manually tripped Tuesday afternoon during an investigation into the control-element drive mechanism motor generator. After being shuttered for nearly two weeks, the 1,080 MW third unit at the San Onofre Nuclear Generating Station was back on line Wednesday after unplanned maintenance to its backup generator was completed [Kristina Shevory].

Natural Gas Prices Sink as Crude Plummets, Storage Gains

A good chunk of natural gas production has been temporarily halted in the Gulf of Mexico in the advent of Hurricane Ike coming ashore last weekend. About 75 percent of the Gulf's natural gas production remains shut in, according to the U.S. Minerals Management Service. The hurricane also destroyed 49 out of a total of 3,800 platforms that produced 84 MMcf per day.

Nevertheless, natural gas prices this week fell on faltering oil prices, a meltdown in the financial markets, reduced demand, and a storage boost.

First up, the market crisis has hammered oil prices, which fell below $100 a barrel this week for the first time since February. Growing fears of a worldwide recession and falling energy demand, coupled with Lehman Brothers' bankruptcy filing, AIG's bailout by the federal government and Merrill Lynch's sale, contributed to the mass selloff in oil futures this week. Treasury Secretary Henry Paulson's promise of a bailout package for the financial industry helped a market rebound Friday.

Natural gas futures are not faring any better. Last Thursday they sank to their lowest levels since 2008 -- $7.24/MMBtu -- and on Friday closed at $7.54. But futures are still up 16 percent compared to levels last year, Enerfax reported.

This week, Western natural gas prices were erratic but finally ended Friday sharply lower. Values settled around $4.18/MMBtu at the San Juan Basin, but at one point Friday they traded at $3.50. The Southern California border saw prices dive as low as $5.

In the West, only the Malin Hub ended Friday on a high note, gaining 20 cents for the week to $6.22/MMBtu.

Natural gas storage rose by 67 Bcf last week. At 2.97 Tcf, storage is nearly 5 percent lower than last year. Western stockpiles inched up by 12 Bcf to 399 Bcf, leaving totals 3 percent less than last year. Compared to the five-year average, Western and national levels are 2 percent higher [K. S.].

Western Electricity Prices
Week's End: Sept. 15 - 19, 2008
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 27.46-999.99 12.05-80.98
Mid-Columbia 54.65-64.95 45.75-52.25
COB 60.25-68.50 45.50-52.50
NP 15 60-68.25 41.60-50.75
SP 15 59.75-69 40-50.75
Palo Verde 51.50-58.50 34.75-45

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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