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Western Price Survey

Week's End Edition
September 22, 2006
Slip in Gas Costs and Demand Lead to Lower Prices

Peak-time power prices recovered somewhat at the start of this week after sinking quickly late last week in concert with natural gas costs. A slight resurgence in the price of natural gas and the loss of a nuclear unit in the Southwest contributed some stability to power prices.

Demand certainly did not help the picture. Though the skies over much of California are clear, the temperatures have been well within the normal range, keeping power demand in check. The California Independent System Operator peak load on Monday stayed just below the 36,000 MW mark and was hard pressed to top 34,000 MW throughout the rest of the week.

Unit No. 1 at the Palo Verde nuclear power plant, which had been plagued with operational difficulties during the first half of the year, managed to stay on line most of the summer. Plant operator Arizona Public Service was forced to put the 1,243 MW No. 1 unit in the sick bay this week, however. The facility was taken off line in the early hours Tuesday on account of malfunctioning pressurizer heaters. APS estimates the unit will be off line for a couple of weeks in order to replace the heaters.

Even with the large nuclear unit off line, the cost of power in the Southwest remained on a fairly even keel this week. The price of peak-time power at Palo Verde opened Monday at between 42.50 mills and 46 mills/KWh. By the end of the week, daytime prices at PV bottomed out at between 35 mills and 38.50 mills/KWh as late-week gas values took a hit. Off-peak power at PV moved for between 26 mills and 30.25 mills/KWh at the beginning of the week. The price of nighttime power reached 33.25 mills/KWh on Wednesday before fading to the high 20s on Friday.

The cost of day-ahead peak power at the South of Path 15 delivery point topped out at 52.50 mills/KWh on Monday. The value of daytime power edged down to a range of 46.75 mills and 50 mills/KWh at midweek and continued to slide in late-week trading. Friday's transactions closed with a low of 40.75 mills/KWh. The cost of nighttime power at SP15 closed on Wednesday within the range of 34 mills and 36.25 mills/KWh, just a mill or two more than the price at the start of the week. Nighttime power at SP15 changed hands for between 32.25 mills and 35.25 mills/KWh on Friday.

In the North of Path 15 territory, day-ahead high-demand power changed hands for a high of 52.50 mills/KWh at the start of the week. Gentle erosion in value eased the price down to between 47.25 mills and 50 mills/KWh on Wednesday. Trades conducted Friday were valued at between 41.50 mills and 44.25 mills/KWh. Off-peak power at NP15 moved for a minimum of 33 mills/KWh on Monday before edging up to a range of 34.25 mills and 36 mills/KWh in Wednesday's session.

Mid-Columbia peak-time power cost as much as 46.50 mills/KWh at the start of this week. Power packages at the hub drew between 43 mills and 45.50 mills/KWh in the middle part of the week before leveling off just above the 40 mills/KWh mark at the end of the week. Off-peak power attracted between 33.25 mills and 36 mills/KWh most of the week. The price skipped up to a range of 39 mills to 40.25 mills/KWh on Friday [Shauna O'Donnell].

Strong Storage Numbers, Mild Weather Keep Deflating Gas Prices

Natural gas prices in the West continue to swoon in response to the increasing amount of supply in underground storage, the lessening threat of significant weather-related disruptions in production and the flattening of demand typical at this time of the year.

The Energy Information Administration on Thursday reported injections into storage of 93 Bcf last week, bringing the national figure up to 3,177 Bcf. Stored quantities in the West totaled 427 Bcf, 30 Bcf more than at the same time last year and 14 percent above the five-year average.

After spending most of the week in the mid to high $4 range, gas values at nearly all Western delivery points dropped by nearly $1 during the Thursday and Friday period. Permian Basin gas attracted a high of $4.80/MMBtu at the start of the week. By Friday the spread at the Texas trading point ranged from $3.47 and $4.30/MMBtu. San Juan Basin gas fared no better, dropping down to a low of $3.40 at the end of the week, a drop of more than $1.25 from Monday's high of $4.73/MMBtu.

Southern California border gas attracted between $4.71 and $4.97/MMBtu at the beginning of the week. The price for Topock deliveries managed to remain in that range until Friday, when a low of $3.67/MMBtu was reached [S. O'D.].

Western Electricity Prices
Week's End: Sept. 18 - 22, 2006
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 41.12-230.20 22.17-94.66
Mid-Columbia 40.25-46.50 32.50-40.25
COB 41.75-50 34-40.50
NP 15 41.50-52.50 31-36
SP 15 40.75-52.50 31-36.25
Palo Verde 35-46 26-33.50

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 Shauna O'Donnell, editor with questions regarding Price Survey Content.

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