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Western Price Survey

October 27, 2017
Extreme Heat Propels Energy Prices

With daytime high temperatures in the triple digits across Southern California and record heat in Arizona this week, Western energy prices skyrocketed, driven by power demand.

Some daytime power prices also reached triple digits, while Southern California natural gas values rose to double digits.

Although Oct. 23 was the hottest day in some areas, temperature records were still being surpassed through Oct. 26 in Southern California, according to the National Weather Service. Camarillo, Calif. had a high of 103 degrees Oct. 25, shattering the previous record of 88 degrees.

At $12.57/MMBtu on Oct. 23, prices at the SoCal CityGate hub reached their highest daily average on record, according to the U.S. Energy Information Administration. Enerfax on Oct. 25 reported prices at the hub hit $12.59/MMBtu.

“Spot prices in Southern California have been volatile during the past week due to outages and much warmer-than-normal weather,” noted the EIA in its weekly report. Factors included an unplanned outage and planned maintenance work on Southern California Gas Co.’s pipelines, which constrained deliveries supplying Los Angeles. Still, thermal generation on the California Independent System Operator grid reached 21,937 MW on Oct. 24.

“The extreme heat could not come at a worse time,” noted EnergyGPS in an Oct. 25 report. Systemwide constraints contributed to “uncharacteristically strong gas prices across Southern California,” which, “in combination with strong demand has pushed [power prices] into the triple digits for the last two days.”

South of Path 15 peak power reached $120.90/MWh, on average, Oct. 23.

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The high prices did not last. Western peak power prices lost between $12 and almost $20 compared with the previous week. SP15 peak power lost the most, down $41.10 to $37/MWh in Friday-to-Friday trading.

Meanwhile, working natural gas in storage was 3,710 Bcf as of Oct. 20 according to EIA estimates. This is a net increase of 64 Bcf compared with the previous week. It is 4.8 percent less than a year ago, and 1.2 percent less than the five-year average.

Henry Hub gas spot values added 7 cents to reach $2.89/MMBtu between Oct. 19 and Oct. 26.

In Thursday-to-Thursday trading, Western prices gained between 2 and 45 cents. Southern California Border gained the most, adding 45 cents to hit $3.12/MMBtu by Oct. 26. PG&E CityGate posted the highest price among Western hubs at $3.17/MMBtu.

Power demand on the CAISO grid reached 39,204 MW Oct. 24. In the week ahead, power use should remain around or less than 29,000 MW, according to the grid operator’s forecast.
–Linda Dailey Paulson.

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 Mavis Scanlon, editor with questions regarding Price Survey content.

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