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Western Price Survey

Week's End Edition
October 7, 2011
Western Natural Gas Prices Tank

Western natural gas prices dropped significantly by Friday, Oct. 7, amid what the U.S. Energy Information Administration called a "whirlwind of generally unsupportive market fundamentals." Power prices lost value as well, but these drops were not as dramatic.

Domestic natural gas prices fell sharply as a result of several market conditions: robust natural gas storage; more rigs drilling for gas; and less consumption by the power sector. Western hubs' average natural gas prices lost about 60 cents between Friday, Sept. 30 and Friday, Oct. 7.

Over that trading period, Ruby-Malin gas lost 61 cents to end at roughly $3.01/MMBtu. PG&E CityGate and Malin each lost 57 cents, finishing at $3.43/MMBtu and $3.04/MMBtu, respectively. Southern California Border was down 56 cents to $3.20/MMBtu.

Working gas in storage was 3,409 Bcf as of Sept. 30, according to EIA estimates, a net increase of 97 Bcf from the previous week. Stocks were 78 Bcf less than last year at this time and 28 Bcf above the five-year average of 3,381 Bcf.

In the Sept. 30 to Oct. 7 trading period, here's how average peak-power prices fared:

  • Mid-C: Lost about $5.25 to about $24.65/MWh.
  • California-Oregon Border: Dropped around $5.55 to $26.20/MWh.
  • NP15: Off $3.55; traded for about $31.80/MWh Oct. 7.
  • SP15: Down almost $3.20 to roughly $32.80/MWh.
  • Palo Verde: Lost around $3.25 to about $33.30/MWh.

Over the same time frame, nighttime average prices at Western hubs fell between $2 and $5.80/MWh. Northwestern hubs posted the greatest losses. Average prices by Friday ranged from roughly $24 to $25.50/MWh (see chart).

Peak demand on the Cal-ISO grid reached 30,961 MW on Oct. 2, the week's high. The next uptick in demand should occur Oct. 12 when, according to the grid operator, use should be around 35,300 MW.

What's ahead: A system entering the Northwest Monday brings rain to Seattle and a cool, wet, and breezy forecast Tuesday and Wednesday, with temperatures in the high 50s. Another system keeps showers in the forecast through Thursday. Portland's forecast becomes uncertain after Monday's predicted rains, although forecasters expect a cold front Oct. 15 or 16 that may bring the season's first snows.

By contrast, San Francisco is looking forward to Indian summer in the week ahead thanks to a high-pressure system parked over the state. Temperatures should hit a high Wednesday of 81 °F. Los Angeles should also be sunny, with Wednesday and Thursday expected to be the warmest days for the region with some areas reaching into the 90s [Linda Dailey Paulson].

Western Electricity Prices
Week's End: October 3 - 7, 2011
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 26.93-943.67 16.88-57.34
Mid-Columbia 23.25-29 22-26.50
COB 26-31 23.75-28
NP 15* 31.25-33.75 22.75-26.25
SP 15* 31-35 21-25.50
Palo Verde 30.50-35.05 20.50-25.25

* 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.

Please contact with questions or comments about this site.

Contact Chris Raphael, editor with questions regarding Price Survey Content.

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