Western Price Survey
October 28, 2005
Natural gas, the fuel of necessity for many electricity generators in the West, remained in the driver's seat as the price of power moved up and then down this week. An increase in the price of natural gas gave a jolt to the price of electricity at midweek, but sagging fuel costs drew spot-market electricity prices down at the end of the week. The increase in both natural gas and electricity prices was driven by colder weather conditions on the East Coast during the first part of the week. This rise was offset by a softening in the market brought on by news of a hefty injection of natural gas into the country's underground storage facilities.
Power prices in Southern California increased by about 10 mills over the first three days of the week, topping out at 105.75 mills/KWh on Wednesday. The price faded quickly in trading of weekend packages on Thursday. Daytime power traded that day for between 94.25 mills and 96.75 mills/KWh. Off-peak power costs went from a low of 70 mills/KWh on Monday to a high of 86.75 mills/KWh on Friday.
In the northern half of the state, peak power opened the week trading for between 90.50 mills and 94.50 mills/KWh. The price increased steadily over the next two days, matching the SP15 high of 105.75 mills/KWh on Wednesday. The late-week drop in natural gas prices drew the hub price down to between 94.75 mills and 96.25 mills/KWh on Thursday. Next-week packages exchanged Friday worked their way back up to 101.50 mills/KWh on Friday. Low-demand electricity at NP15 attracted as much as 87 mills/KWh at midweek, an uptick of more than 15 mills from the price recorded Monday.
Last week's return of two units at the Palo Verde Nuclear Generating Station eased the pressure on Southwest power prices. Units No. 2 and No. 3 are now running at full capacity, while Unit No. 1 remains on a refueling outage. The No. 1 unit at Pacific Gas & Electric's Diablo Canyon nuclear power facility was taken off line this week for refueling as well.
The cost of peak-time electricity at Palo Verde bottomed out at 78.75 mills/KWh on Friday. PV daytime power changed hands for between 81 mills and 85 mills/KWh at the start of the week. Nighttime power at PV traded for a low of 60.25mills/KWh early this week before scooting up to 77 mills/KWh on Wednesday. By Friday the commodity had shed another 5 mills in value.
Mid-C power was priced at between 80.75 mills and 82 mills/KWh for daytime packages scheduled for Tuesday delivery. Thursday deliveries went for a high of 93.25 mills/KWh, but were back down to the mid-to-high 80s at the end of the week. Off-peak power at Mid-C drew prices in the low 70s at the start of the week, increasing to nearly 85 mills/KWh on Wednesday, but quickly dropped back down to a range of 76.50 mills and 78.50 mills/KWh during Friday's trading session.
Hurricane Wilma packed a wallop in Florida earlier this week, knocking out power to about 2 million electricity customers. Restoration work continued on Friday, with the Department of Energy reporting that some locations in the state will be without power until the middle of November [Shauna O'Donnell].
Gas Stores Up Some Relief
Natural gas prices swooned at the end of the week following the Energy Information Administration's weekly natural gas update. The EIA recorded a hefty 77 Bcf injection of gas into storage for the week ending October 21. This brought the amount of gas in storage up to 3,139 Bcf, slightly less than the 3,245 Bcf in storage at this time last year, but still about 2 percent more than the five-year average. In the West, stored gas totaled 432 Bcf, nearly 12 percent more than the five-year average for the region.
As is generally the case, West Coast gas remained on the lower end of the price range this week. Gas delivered to the Southern California border receipt point at Topock topped out at a high of $11.90/MMBtu at midweek, up from Monday's figure of $9.90/MMBtu. Friday brought with it the week's low throughout the West. Topock gas that day traded for $9.50/MMBtu.
Malin gas ranged from a high of $11.95/MMBtu on Wednesday to a low of $9.50/MMBtu on Friday.
At the producing basin at Permian, gas moved for between $9.84 and $10.05/MMBtu at the start of the week before scooting up to $11.57/MMBtu on Wednesday. The price dropped as low as $9.18/MMBtu at the end of the week [S. O'D.].
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