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Western Price Survey

Week's End Edition
October 30, 2009
Power Prices Dip on Ebbing Demand, Falling Natural Gas Prices

Daytime electricity prices tumbled this week, falling as much as $4/MWh to $10/MWh on lower natural gas prices and lower power demand.

Spot natural gas prices in the West finished the week lower as well, trading down as much as 50 cents/MMBtu. Natural gas for December delivery, however, ended the week 47 cents higher at $4.98/MMBtu.

On Nymex, the natural gas contract for November delivery, which expired on Tuesday, closed at $4.55/MMBtu. It was the first time in six years that a November contract settled below $5/MMBtu.

At the California-Oregon border, average peak electricity prices dipped $7 to $46.83/MWh. Off-peak prices traded down $3 to average $37.56/MWh.

Mid-Columbia prime values tumbled over $10 to average $42.86/MWh, while off-prime prices dipped $3 to $36.76/MWh.

A big storm, largely made up of the remnants of Hurricane Neki, has pummeled British Columbia and will bring more rain to the Northwest this weekend, according to AccuWeather. It will be raining through Tuesday in Portland and Seattle, with temperatures cooling from the low 60s to the high 50s by Monday, according to the National Weather Service.

High pressure is returning to California, and with it comes warmer weather. Temperatures in San Francisco will increase from the mid-60s to the high 60s by Monday. In Los Angeles, peak temperatures will jump to the high 80s by Monday, according to the National Weather Service. Phoenix will see temperatures in the mid-80s.

The Golden State saw peak demand for electricity tumble to 29,400 MW Tuesday from 31,400 MW on Monday. Demand was expected to fall to 28,000 MW on Friday, according to the California Independent System Operator. This weekend, usage is likely to ebb to 26,600 MW on Saturday and 27,700 MW on Sunday.

Peak trades in California slipped $4 at North of Path 15 to $50.19/MWh, and fell $6 to $47.80/MWh at South of Path 15. Off-peak prices rose more than $1 to $40.32/MWh in the north, and $37.70/MWh in the south.

Palo Verde daytime values fell over $4 to $38.73/MWh, while nighttime trades grew by $1 to $32.36/MWh.

Working natural gas in storage last week set a new record, climbing 25 Bcf to 3.759 Tcf, according to the U.S. Energy Information Administration. Natural gas supplies currently stand 11 percent higher than last year and 12.4 percent above the five-year average.

Fresh record highs were set in each of the three regions nationwide last week. In the West, supplies grew by 7 Bcf to a new high of 513 Bcf and exceeded the area's demonstrated peak capacity, a five-year average of each storage field's maximum, of 509 Bcf. This new record indicated that one or more storage facilities set new record levels of natural gas in storage, the EIA said.

High drilling rates and a supply overhang continue to have more of an effect on natural gas prices than the weather. Through Oct. 29, natural gas production is about 3 percent higher than last year, according to Bentek Energy.

Last year, proved natural gas reserves rose by nearly 3 percent thanks to the discovery of unconventional fields across the country. Proved reserves have a reasonable certainty of being developed under current conditions and with existing technology. At the end of 2008, domestic natural gas reserves hit 244.7 Tcf, the highest level in the 32 years the EIA has collected the data.

A number of the West's major nuclear power plants are operating at reduced power this fall while power demand is light. The Diablo Canyon and Palo Verde nuclear power plants each have their second units off line while their reactor-vessel heads are replaced. Diablo Canyon's 1,130 MW second unit and Palo Verde's 1,336 MW second unit will resume full power when the swaps are completed. The San Onofre Nuclear Generating Station's 1,070 MW second unit is powered down for the next three months while two steam generators are replaced [Kristina Shevory].

Western Electricity Prices
Week's End: October 26 - 30, 2009
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 25.13-72.61 15-40.18
Mid-Columbia 41.75-54.50 32-43.50
COB 46-54.50 35.50-43
NP 15* 49-55.50 36-41.25
SP 15* 47-54.25 34-37.75
Palo Verde 38.25-44.50 29-33.50

* 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.

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

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