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Western Price Survey

Week's End Edition
September 25, 2009
Natural Gas Prices Etch New Highs, Yet Power Prices Slide

Natural gas prices hit new six-week highs three days in a row as traders covered shorts and bet on an economic recovery and a frigid winter. Natural gas for October delivery on Nymex climbed from $3.57/MMBtu on Monday to $3.97/MMBtu on Friday.

Meanwhile, Henry Hub prices closed out this week at $3.55/MMBtu, up 26 cents on the week. Spot prices have doubled since the beginning of the month (see chart).

The energy markets are starting to reflect expectations of a colder-than-usual winter. Natural gas for December delivery settled at $5.66/MMBtu on Friday. Meteorologists at Commodity Weather Group, a private firm outside Washington, D.C., predicted in a weekly report that "the coldest winter in a decade may be on the way."

However, gas prices have still not cracked $4/MMBtu and are unlikely to do so until brimming supplies are trimmed. Working natural gas in underground storage climbed 67 Bcf to 3.525 Tcf and now exceeds last year's level by 16.9 percent and the five-year average by 16 percent, according to the U.S. Energy Information Administration. Inventories are now at the fifth-highest weekly level since tracking began and are on track to set a new record for the injection season that ends on Halloween. The all-time high of 3.565 Tcf was set two years ago.

The general rise in natural gas prices has pushed Western power prices above $50/MWh, a level some hubs have not seen since January and February. However, the small gains in natural gas prices this week also did little to affect peak power in the West, though nighttime power seemed to gain.

Peak California trades declined more than $8 to average $43.03/MWh at North of Path 15 and $40.81 at South of Path 15. Off-peak values increased $4 in the north to settle at an average of $36.11/MWh, and added $5 in the south to $32.56.

Average Palo Verde prime values did not move much, though nighttime power added about $7 to average $27.98/MWh.

Peak power demand started the week at 39,100 MW on Monday and hit 41,200 MW on Thursday, the California Independent System Operator said. Top usage was expected to hit 40,800 MW on Friday.

Hot, dry weather, teamed with gusty Santa Ana winds and low humidity, have sparked new fires across Southern California. The Guiberson fire, the largest, started on Tuesday and quickly spread to 17,500 acres, according to the California Department of Forestry and Fire Protection. On Friday, it was 75 percent contained, but was threatening five transmission lines that supply power to Santa Barbara and Ventura County.

In the Northwest, at the California-Oregon border, daytime trades plummeted $10 to average $39.57/MWh. Average nighttime prices picked up $6 to $35.85. Average Mid-Columbia prime values tumbled more than $7 to $36.70/MWh, while off-prime trades rose nearly $3 to $30.59.

What's ahead: An area of high pressure over California has boosted temperatures as much as 10 to 15 degrees above average and will keep the state toasty through this weekend, according to AccuWeather. High temperatures will hit 99° F in Los Angeles and the low 80s in San Francisco. Starting on Monday, however, temperatures will start to ease in California by as much as 20 degrees.

Diablo Canyon's 1,138 MW second unit came back to full power on Thursday after operating at 80 percent capacity for more than two weeks. After one of its six feedwater heaters was repaired, the unit restarted on Tuesday [Kristina Shevory].

Western Electricity Prices
Week's End: September 21 - 25, 2009
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 17.41-999.99 11-40.29
Mid-Columbia 33.50-46 24-35
COB 36.50-50 25.50-36.50
NP 15* 42-53 26.75-37
SP 15* 39.50-52 23-34
Palo Verde 29.50-40 17.25-30

* 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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