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Western Price Survey

October 7, 2005
What a Difference a Year Makes: Traders Seeing Double Now

The price of peak-time power north of Path 15, for example, ranged from a low of 96 mills/KWh on Monday to a high of 116 mills/KWh recording the following day.

The price of off-peak power at NP15 ranged from 74 mills to 85.25 mills/KWh during the first half of this week, just about double the price of the commodity recorded last year. The price hit 89.75 mills/KWh on Thursday on account of the Columbus Day holiday next Monday. Typically the high would be recorded on Friday, because the power being traded was scheduled for next-week delivery. This week, the Sunday-Monday packages were traded on Thursday.

South of Path 15, trading for peak-time power opened the week between 97.25 mills and 103 mills/KWh before reaching 120 mills/KWh on Tuesday. The price stayed above the century mark the rest of the week. Nighttime power at the hub attracted a low of 73.25 mills/KWh on Monday before rising to a high of 89.75 mills/KWh on Thursday. By Friday the cost had slipped to the mid-70s range.

The California-Oregon Border price for electricity topped out at 107 mills/KWh on Tuesday. That high was bookended by 89.25 mills early in the week and 93 mills/KWh by week's end. Off-peak power at the hub ranged from 76 mills/KWh at the start of the week to 89.25 mills/KWh for next-week deliver-ies.

Mid-Columbia peak-time power traded for between 85 mills and 86.25 mills/KWh at the beginning of the week. Off-peak power at Mid-C changed hands for a high of 89.25 mills/KWh on Thursday, about 10 mills higher than at the beginning of the week. Nighttime power at Mid-C closed out the week between 77.75 mills and 79.25 mills/KWh. Palo Verde prices relaxed as the week wore on. The cost of peak power on the spot market ranged from a high of 108 mills/KWh on Wednesday to a low of 90.50 mills/KWh in Friday trading. The price was influenced by the return to service of Unit No. 3 at the Palo Verde Nuclear Generating Station. The 1,247 MW facility was shut down last weekend to replace an oil seal in the reactor's coolant pump. Ac-cording to the Nuclear Regulatory Commission, the unit was on its way back to full power at the end of this week and was generating 12 percent of its capacity [Shauna O'Donnell].

Gas Continues Upward

Up, up and away go natural gas prices, and Western retail suppliers and regulators are doing their best to get the word out to consumers that the bills they will open this winter will contain some not-so-good news.

As of this week, the price of natural gas in the Western wholesale spot market is running near the $11 mark. Still, not only will consumers be counting pennies so enough, but they should likely count their blessings as well. On the East Coast gas costs are ensconced closer to the $15/MMBtu level.

The Energy Information Administration has been issuing a situation report daily on the status of production and shipment of both gas and oil during the past two weeks. According to the October 6 re-port, more than 6.6 Bcf of gas is shut-in in the Gulf of Mexico. This is equivalent to 66 percent of the normal production in the region.

Chevron's Western Louisiana facilities remain shut-in and force majeure continues on portions of the Kinder Morgan and Columbia Gulf Transmission systems. Most of the facilities owned by Williams Cos. are in operation.

Members of the California Public Utilities Com-mission held a hearing Thursday with Martha Es-cutia, chair of the state Senate Energy, Utilities and Communications Committee; Lloyd Levine, chair of the Assembly Utilities and Commerce Committee; and state Senator Richard Alarcon, who sits on the Senate energy committee.

"We're deeply concerned about the impacts of the very very sharp rise in natural gas prices on Cali-fornia and particularly on low and middle income families," said CPUC President Michael Peevey.

Peevey was joined by CPUC Commissioners Geof-frey Brown, Dian Grueneich and Susan Ken-nedy.

Senator Alarcon said he was disappointed with the results of current utility low-income programs because they do not serve as many people as they could be. He challenged the CPUC and utilities to do more to help low-income residents, particularly with gas bills this winter. "Low-income people deserve a break when it comes to this vital service," he said.

Senator Levine said the only way to truly address the problem of high utility bills is to require utili-ties to use more renewable power--through acceleration of the state's renewables portfolio standard--and to in-crease energy efficiency, particularly of gas-fired power plants. "With a diversity of fuel supply we can break our dependence on natural gas," Levine said. This "will make prices go down.

Senator Escutia said diversifying California's fuel supply and increasing energy efficiency should yield benefits to low-income customers and not simply be ends in themselves. "We can talk about diversi-fying our portfolio and energy efficiency, but if our low-income customers can't benefit from it, it's no good," she said.

Gas prices have risen steadily over the last five years, from $2.25 per million Btu in early 2000 to more than $12/MMBtu this year, Sean Gallagher, director of the CPUC's Energy Division, reported at the hearing. Meanwhile, natural gas production in North America has flattened or declined, while demand has continued to rise, particularly because it is a prime fuel for electricity generation.

Customers will likely pay 50 percent more for gas this winter than they paid last winter, according to CPUC forecasts. A typical Pacific Gas & Electric customer who uses 89 therms per month is forecast to pay $154.23 for this January's monthly bill, in contrast to $107.83 last January. The forecast amount is almost twice the $79.81 the typical customer paid in January 2003.

The typical Southern California Edison customer's bill is expected to jump from $78 for 75 therms last January to $124 this coming January, according to the CPUC. The typical San Diego Gas & Electric customer who uses 50 therms per month can expect to pay $80 this January, up from $55 last January.

Low-income customers of investor-owned utilities are eligible for discounts of 20 percent on their elec-tricity and natural gas bills under the California Alternate Rates for Energy (CARE) program. The Low-Income Energy Efficiency (LIEE) program provides low-income households with energy efficient appliances and home weatherization.

PG&E has more than 1.2 million low-income customers who qualify for the CARE program, but only 900,000 of them participate. There is also a gap between the number of Edison customers eligible for CARE and the less than 1 million who are enrolled.

Representatives of community organizations that work with low-income residents appealed to the CPUC to expand and better publicize low-income programs.

"Tens of thousands of low-income customers will be told this winter they have to make a choice between heat, rent and groceries," said David Lizarraga, president and CEO of the East Lost Angeles Community Union. He added that utility energy efficiency programs are out of reach of many customers. "Many low-income customers can't afford the appliances needed to conserve," he said.

PG&E said it was focusing on communicating with customers to warn them about higher gas prices this winter, as well as expanding existing programs, including its Relief for Energy Assistance Through Community Help programs (REACH). PG&E said it would increase company contributions to the REACH program--though it did not give a figure. The utility is trying to double employee and customer contributions to the program to $3 million for this winter.

PG&E also said it might be able to use some of the gas it has in storage to offset high prices this winter.

Edison said it would waive reconnect service deposits for all CARE customers whose service is disconnected due to nonpayment between November 30 and March 31. Like PG&E, Edison said it would expand outreach efforts such as mailing campaigns, to encourage eligible customers to enroll in the CARE program. Edison also plans to provide a toll-free telephone number where CARE customers can call to re-certify their program eligibility. The company also plans to hold off removing ineligible customers from the program until March.

"The focus here is, what can we do to lower the bill of the low-income customer?" said Anne Smith, senior vice president at SoCal Gas and SDG&E.

SDG&E and Southern California Gas plan to quadruple their shareholders' contributions to the utilities' bill paying assistance programs, and to match utility employees' contributions, which could result in up to $1.2 million of assistance this winter, the utilities said in comments filed with the CPUC September 28.

On October 3, CPUC Administrative Law Judge Steve Weissman asked PG&E, Edison, SDG&E and SoCal Gas and Southwest Gas what funds, if any, they had left over from last year's low-income program funding. He also asked how the utilities would be impacted if the CPUC were to eliminate re-connection fees for CARE customers; ban winter service shutoffs for customers who make minimum bill payments; and suspend collection of deposits from low-income customers [Shauna O'Donnell and Cassandra Sweet].

Western Electricity Prices
October 3 - 7, 2005
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 10.95-408.34 10.78-76.74
Mid-Columbia 85-90 75-89.25
COB 89-107 76-89.25
NP 15 96-116 74-89.75
SP 15 97.25-120 73.25-89.75
Palo Verde 93-108 65-81.50

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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