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Western Price Survey

September 30, 2005
Hurricanes, Heat Put Pressure on Prices

In knocking out much of the natural gas production in the Gulf of Mexico, Hurricanes Rita and Katrina have knocked natural gas prices into the stratosphere. On Wednesday, natural gas prices rose to a record $13.90/MMBtu in trading on the New York Stock Exchange. On Thursday, a new record was set as Henry Hub futures traded above $14/MMBtu. Prices held most of their ground on Friday.

While electricity prices seem to have followed the rise, hot weather in California also played a big role this week. The California Independent System Operator called on Southern California to conserve electricity on Wednesday, when temperatures climbed 15 to 20 degrees from the previous day. On Thursday, peak electricity demand hit 39,725 MW, and the California-Mexico Reliability Center reported electricity reserves of 8 percent, just 1 percent above required levels.

South of Path 15 peak power began the week trading between 90.25 mills and 95.50 mills/KWh and rose steadily through the week, trading Friday at a high of 107 mills/KWh. Off-peak power, which traded Monday at 64.25 mills/KWh, climbed to 84.25 mills/KWh for next Monday's deliveries.

North of Path 15 power followed a similar course. On Monday, electricity went for 90 mills to 95 mills/KWh but by Thursday prices pushed up to 104 mills/KWh. Low-demand electricity traded between 65 mills and 68 mills/KWh Monday before rocketing to 86 mills/KWh Friday.

Daytime power at Palo Verde, which moved tightly between 86.25 mills and 89 mills/KWh Monday, made steady gains through the week and reached 99.50 mills/KWh by Friday. Nighttime electricity traded for between 60 mills and 64 mills/KWh much of the week before bouncing to 73 mills/KWh.

At the California-Oregon border, peak power started the week between 86.50 mills and 89.50 mills/KWh. By Thursday, however, the commodity traded at a high of 97 mills/KWh. Off-peak power traded for the most part around 70 mills/KWh through Wednesday until it reached 83.50 mills/KWh in Friday trading.

Mid-Columbia peak power traded between 78.75 mills and 92 mills/KWh, with higher prices set at the end of the week. Off-peak power was priced between 67 mills and 82 mills/KWh.

Cal-ISO has said that so far, wildfires in Southern California have not caused any significant transmission problems. "We continue to be concerned however, because the fire situation can change quickly," Cal-ISO spokesman Gregg Fishman said [Chris Raphael].

Natural Gas Prices Soar

Hurricanes Katrina and Rita, which knocked out roughly 75 percent of Gulf of Mexico natural gas production, seem to have taken a toll on natural gas storage.

While an additional 47 Bcf of natural gas were put in storage in the East by September 23, only 6 Bcf made it to the West and no additional gas made it to storage in producing states, according to the U.S. Energy Information Administration. In addition, stocks of natural gas in the Lower 48 states are just 2.4 percent above the five-year average.

San Juan Basin natural gas, which traded at $9.09 on Monday went for $11.07/MMBtu on Thursday. Permian Basin natural gas, which traded at $9.46/MMBtu for Tuesday deliveries climbed to $11.32/MMBtu for Friday deliveries. Meanwhile, in Thursday trading, Southern California border gas hit $11.57/MMBtu and Malin gas reached $11.70/MMBtu. Prices at all four hubs dropped a bit on Friday, trading mostly in the $10 to $11/MMBtu range
[C. R.].

Western Electricity Prices
September 26 - 30, 2005
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 19.42-287.41 8.98-71.78
Mid-Columbia 78.75-92 67-82
COB 85-97 69.50-83.50
NP 15 90-104 65-86
SP 15 90.25-107 64.25-84.25
Palo Verde 86.25-99.50 58.75-73

Archives of the Western Price Survey for the past year are also available online.


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