Western Price Survey
Week's End Edition
After a temporary boost from hot weather, Western power prices fell sharply in the Sept. 28 to Oct. 5 trading period, with a steep drop coming in Southern California.
A late-season heat wave had sent California power prices soaring at month's end. South of Path 15 reached an average price of $72.67/MWh Sept. 28, while North of Path 15 hit a high of $61/MWh.
As cooler weather arrived, prices fell. Here's how average peak prices fared since last Friday:
Off-peak prices gained roughly $2 to $3 over the trading period. Nighttime power prices Friday ranged from $24.60/MWh at Palo Verde to almost $28.65/MWh at the California-Oregon Border.
Working gas in storage reached 3,653 Bcf as of Sept. 28, according to U.S. Energy Information Administration estimates, a net increase of 77 Bcf from the previous week. Storage levels are now 8 percent higher than a year ago and 8.3 percent above the five-year average.
Henry Hub natural gas values gained 18 cents since last Friday, trading Oct. 5 at $3.26/MMBtu. Western prices generally followed suit. Malin and Ruby-Malin natural gas rose 21 cents to $3.24/MMBtu; PG&E CityGate added 13 cents to $3.83. Southern California Border gas proved the exception, shedding 7 cents to $3.38 by Friday.
Barclays analysts, in a commodities report released Oct. 5, noted that natural gas prices are "dislocated" from market fundamentals. They expect prices to correct incrementally in the weeks ahead.
"As we head into October, the market no longer appears to be afraid of storage filling up before the end of the injection season," noted the Barclays analysts. They also noted that the natural gas "market is looking for a more normal winter, which would automatically push demand 2 Bcf/d[ay] higher [year over year]."
The firm is adjusting its forecast price for natural gas in the fourth quarter from $3/MMBtu to $3.35/MMBtu.
Peak demand on the Cal-ISO grid hit 43,267 MW Monday, Oct. 1, which was the week's high. Northwest Power Pool demand reached 50,003 MW Tuesday.
What's ahead: Cooler temperatures are expected across much of the western U.S. the week of Oct. 8. The forecast for the California mountains -- areas including south of Interstate 80 and the southern Sierra Nevada -- features snow Monday and Tuesday. That same system may bring rain or drizzle to the Los Angeles area through Wednesday night. San Francisco should be in the mid-60s under partly sunny skies into Thursday.
Meanwhile, Seattle and Portland are expected to have sunny skies and warm temperatures through Thursday. Seattle should be in the 60s into Thursday. Portland temperatures are expected to hover around 70 °F through Thursday [Linda Dailey Paulson].
* 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.
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