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Western Price Survey

Week's End Edition
October 22, 2010
Natural Gas Market Expects Moderate Prices for Winter

The natural gas market should expect moderate prices in the coming year, according to FERC's Winter 2010/2011 Energy Market Assessment, released Oct. 21. The agency pronounced the market "in good shape" given recent high production levels, moderate pricing, and adequate supplies.

Increased production and new supply sources -- namely new shale gas, which the agency says now accounts for 20 percent of domestic gas production -- spurred gas demand for electricity generation during the past winter and summer, according to FERC's analysis. According to the U.S. Energy Information Administration, a 93 Bcf addition to natural gas reserves provided a total of 3.683 Tcf in storage as of Oct. 15. With abundant storage, the industry is prepared for the winter, according to FERC's assessment, and a milder winter is forecast for 2010-2011 compared to the previous year.

Additionally, January gas futures are about $4.13/MMBtu, 76 cents above current spot prices, suggesting that financial markets see relatively low risk for high and volatile gas prices this winter, FERC stated. This time last year, the January futures price was $2.43/MMBtu higher than the spot gas price.

Henry Hub spot gas traded at $3.46/MMBtu on Wednesday, Oct. 20, down 12 cents from the previous Wednesday. By Friday, the average price was $3.19. November futures traded for $3.54/MMBtu Wednesday, down 16 cents from the Oct. 13 price.

As for Western electricity prices, in the Friday-to-Friday trading period Oct.15 to Oct. 22, average peak power prices lost between about $1.70 and $5/MWh.

Losses were greatest at Northwestern hubs. Over the six trading days, California-Oregon Border daytime power lost almost $5 to an average of $33/MWh on Friday. Meanwhile, Mid-Columbia dropped about $3.45 to $30.79/MWh Friday.

South and North of Path 15 average peak-power prices lost between about $1.70 and $2.45 in Friday-to-Friday trading. Daytime average power prices at SP15 closed at $33.44/MWh, while NP15 ended the week at $33.63.

Over the six trading days ending Oct. 22, Palo Verde peak power lost about $2.15/MWh, trading for an average of $31.16/MWh Friday.

Off-peak power prices dropped between $2 and $9.25 by week's end. Average prices for nighttime power ranged between about $23.75/MWh and almost $27.75/MWh (see chart).

Peak demand on the Cal-ISO grid reached 30,378 MW Tuesday at 7 p.m., which was the week's high. Demand throughout next week is not expected to exceed 29,500 MW.

What's ahead: Another series of storms enters the Northwest, bringing rain and snow; showers will persist through Monday and Tuesday in Seattle and Portland. Rain should dissipate in San Francisco by the Monday-morning commute. A cold front is expected to hit Los Angeles by early Monday, bringing a possibility of drizzle to the region. The system may also generate windy conditions, including possible mild Santa Ana conditions for Santa Barbara County and the Interstate 5 corridor. Temperatures for the greater Los Angeles region should be in the 80s Wednesday and Thursday [Linda Dailey Paulson].

Western Electricity Prices
Week's End: October 18 - 22, 2010
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 21.91-53.29 18.03-28.97
Mid-Columbia 29.25-37 25-33.25
COB 32.25-38.50 27-35.50
NP 15* 33.25-36.50 27-29
SP 15* 33.25-37 25.75-27.50
Palo Verde 30-34.50 21-24

* 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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