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Western Price Survey

October 12, 2007
Traders Relax and Prices Calm, But EIA Forecasts Higher Prices This Winter

The U.S. Energy Information Administration released its Winter Fuels Outlook this week. It said that the National Oceanic and Atmospheric Administration expects this winter to be 4 percent colder than last year. The Southwest will remain dry, but the Northwest will see more precipitation than normal, possibly making for a good hydro year there. Now, only if there is snow . . .

The downside of the report -- or upside, depending on how you look at it -- is that natural gas use will of course rise with colder weather. The outlook predicted that frigid temperatures should drive the number of heating-degree days in the fourth quarter up by 10 percent and push demand for natural gas up 4.6 percent. Natural gas prices are forecast to rise 6 percent over last winter's prices.

The EIA also said demand for electricity, which is "the primary heating fuel" for 30 percent of Western U.S. homes, will grow by 2.4 percent this year. Along with rising fuel costs for generators, this should push electricity rates up by 2.2 percent.

Also this week, two Western nuclear plants went off line. The 1,080 MW Unit No. 3 of the San Onofre Nuclear Generating Station was taken down early Tuesday for planned maintenance, and will remain down for 30 days.

At the Palo Verde nuclear plant, the 1,314 MW Unit No. 2 shut down Saturday but started ramping back up Friday morning, according to its operator, Arizona Public Service. Palo Verde's Unit No. 3 remains off line for steam-generator and turbine replacement.

Peak power hit its high price at Palo Verde on Monday when it reached $66.75, and its low of $53 came on Friday. Off-peak power gained about $7/MWh from Monday's $39/MWh and finished Friday around $42.

Peak prices at South of Path 15 dropped around $2/MWh for the week, finishing Friday at around $67. Nighttime prices climbed from about $44 Monday to as high as $53 by Friday. North of Path 15 prices were nearly identical.

Prices for daytime power at the California-Oregon Border rose to $67/MWh Monday but closed the week around $63.50. Light power prices averaged almost $46/MWh Monday and $54.43 Friday.

At the Mid-Columbia hub, heavy power averaged around $58/MWh all week but swung $10 during Monday's ses-sion and $5 on Thursday. Off-peak power prices rose from about $46/MWh Monday to around $54 by Friday [Charles Redell].

Natural Gas Storage on the Rise, Though Still Below Last Year's Level

The Energy Information Administration reported that the United States injected 73 Bcf of natural gas into its stores last week, with the West adding 7 Bcf. That brought the nation's total to 3.3 Tcf in storage -- below the amount recorded last year at this time, but 7.6 percent higher than the five-year average.

The EIA also released its Winter Fuels Outlook, which said natural gas stores should reach 3.4 Tcf by the start of winter.

Natural gas traders in the West held prices relatively steady most of this week, until Friday, when prices at many of the hubs dropped about 40 cents/MMBtu. Prices dove not on the winter fuels report and its cold predictions, but rather on a warm weather forecast for much of the nation through the end of October and the storage build.

The Malin, Ore., hub held onto more value than any of the other Western hubs. Natural gas there averaged within a few cents of $6.55/MMBtu all week before dropping to $6.26 on Friday.

At the Permian Basin in Texas, prices held within a few cents of $6.50/MMBtu through Thursday before dropping to $6.07 during Friday's session.

Traders at the Southern California Border hub pushed the value of natural gas around a bit more. The average cost moved from $6.55/MMBtu Monday to $6.68 Tuesday. On Friday the average cost of natural gas at the hub plum-meted to $6.27/MMBtu.

Prices at the San Juan Basin in New Mexico moved up from $6.42/MMBtu Monday to $6.50 Tuesday before fal-ling back to around $6.40 Wednesday and Thursday. Prices tanked Friday, dropping to a low of $5.87/MMBtu [C. R.].

Western Electricity Prices
Week's End Oct. 8 - 12, 2007
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 26.10-352.72 18.06-64.86
Mid-Columbia 54-64 44-55
COB 60-67 45-55.75
NP 15 59-70.75 40-54.75
SP 15 60-71.50 42.50-54.60
Palo Verde 53-66.75 37.25-50

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


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

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