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Western Price Survey

Week's End Edition
October 23, 2009
Higher Gas Values Lift Power Prices

Western electricity prices rode the back of rising natural gas prices this week and posted gains of as much as $10/MWh for nighttime trades. Spot natural gas prices in the West rose from 20 to 60 cents/MMBtu on average.

Cooler weather, climbing crude-oil prices and strong demand to store natural gas for future profits have supported rising natural gas prices. Since the beginning of September, spot Henry Hub natural gas prices have more than doubled, rising from $1.84/MMBtu on Sept. 4 to $4.87/MMBtu on Friday. However, prices remain low compared to last year, when they were about 30 percent higher.

On Tuesday, the front-month contract closed at a nine-month high of $5.16/MMBtu, the first time natural gas for next-month delivery closed above $5/MMBtu. Since Sept. 3, the front-month contract has skyrocketed 103 percent. But the contract quietly gave back some gains the remainder of this week, closing at $4.80/MMBtu on Friday.

Operators tucked away 18 Bcf of natural gas into storage last week, boosting inventories to 3.734 Tcf, according to the U.S. Energy Information Administration. Supplies now exceed last year's level by 11.9 percent and the five-year average by 13.1 percent.

The anemic boost in supplies, 75 percent smaller than last year's, was chalked up to colder-than-average weather and pipeline operators' drawdown requirements. As storage facilities fill up, pipelines are asking interruptible storage customers to withdraw some natural gas.

Western inventories rose 2 Bcf to 506 Bcf, leaving totals about 14 percent above the prior year and five-year average. Each week since Sept. 15, new records have been set in the West and Producing regions, according to the EIA. This week, the East region matched its 15-year record of 2.041 Tcf set last November. For the first time since records have been kept, all three regions hit record highs the same week.

California peak electricity trades gained more than $4 to settle at an average of $59.74/MWh at North of Path 15, and $59.64/MWh at South of Path 15. Off-peak trades rose more than $10 to average $46.66/MWh in the north and $44.27/MWh in the south.

Palo Verde prime prices added $5 to $47.18/MWh, and off-prime prices pushed up $10 to $39.28/MWh.

High pressure and offshore winds will keep the weather pleasantly warm in California through Monday, the National Weather Service said. Peak temperatures will be 68° F in San Francisco, and temperatures will drop from the high 80s into the low 80s in Los Angeles. Phoenix will warm slightly through Monday to the low 90s.

Mild, cool weather has kept California power demand relatively flat this week. Peak usage remained at 30,200 MW on Monday and Tuesday, before climbing to 31,000 MW on Thursday, according to the California Independent System Operator. Demand is projected to ebb to 30,300 MW on Friday and remain around 28,500 MW this weekend.

It'll be wet and windy in the Northwest through early next week. A storm system slammed into the region on Friday, pushing temperatures into the mid- to high 50s in Portland and Seattle and bringing up to two inches of rain in some places. There is a chance of minor flooding, though snow levels are expected to remain above pass level, according to AccuWeather.

At the California-Oregon border, peak prices climbed $8 to average $58.04/MWh. Off-peak values shot up $10 to $48.91/MWh.

Average Mid-Columbia prime trades advanced nearly $8 to $54.18/MWh, while off-prime values climbed $10 to $47.77/MWh.

Diablo Canyon's 1,138 MW first unit returned to full service after kelp and other debris were removed from its cooling-water system. The unit has been running at half capacity for three days. However, the plant's 1,130 MW second unit remains sidelined as its reactor vessel head is replaced. At Palo Verde, the reactor vessel head at the 1,336 MW second unit is also being swapped out and will return to service next month. For the next three months, the San Onofre Nuclear Generating Station's 1,070 MW second unit is closed while its two steam generators are replaced [Kristina Shevory].

Western Electricity Prices
Week's End: October 19 - 23, 2009
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 21.69-72.21 7.85-34.73
Mid-Columbia 45.75-55.50 35-49.50
COB 48.50-58.25 37-50
NP 15* 54.75-61.25 34.50-47
SP 15* 53.50-62 33.25-44.50
Palo Verde 38-49 27.75-40

* 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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