Western Price Survey
Week's End Edition
Traders are watching how power restoration along the Mid-Atlantic seaboard progresses following Hurricane Sandy. Some analysts reportedly fear extended outages could depress natural gas prices, but gas-fired generation could fill the void created by off-line nuclear facilities.
Working gas in storage reached 3,908 Bcf as of Friday, Oct. 26, according to U.S. Energy Information Administration estimates, a net increase of 65 Bcf from the previous week. Storage levels are now 3.6 percent higher than a year ago and 7.1 percent above the five-year average. This supplants a record storage of 3,852 Bcf recorded the week of Nov. 18, 2011.
The market, however, "shook off" the EIA report of record gas storage, according to Enerfax. While power outages affecting more than 6 million customers in the Eastern states mean utilities will be burning less natural gas to meet customer demand, Sandy also shut down three nuclear plants on the East Coast, with two others at reduced operating capacity, for a total reduction of about 6 GW.
Henry Hub natural gas values have gained 2 cents since last Friday, trading Nov. 2 at $3.40/MMBtu. Barclays analysts, in a Nov. 2 report, said they expect the storm to have a net positive effect on gas demand. Colder-weather demand "more than offset the power outages in the northeast so far," they stated. Should power be restored before nuclear facilities are on line, natural gas use should increase by an estimated 1 Bcf/day.
In the West, gas prices seemed unaffected by events back East and moved lower over the trading period. PG&E CityGate dropped 18 cents to $3.68/MMBtu, while Malin gas lost 17 cents to $3.32.
In electricity markets, prices for peak power have jumped several dollars in California since last Friday, while Pacific Northwest values fell by as much as $5.
Here's how average prices for peak power fared over the trading period:
Off-peak prices lost value across the board in Friday-to-Friday trading. Losses ranged from $1.50 at SP15 to about $8.35 at Palo Verde. Off-peak prices Friday ranged from about $24.20/MWh at Palo Verde to $34.75 at SP15.
Peak demand on the Cal-ISO grid reached 31,326 MW Monday, which was the week's high, according to the grid operator. Northwest Power Pool demand reached 50,152 MW Tuesday.
Unit No. 3 of the Palo Verde Nuclear Generating Station began ramping up Nov. 1 after being taken off line late Oct. 24 to repair a valve in the containment building. The Nuclear Regulatory Commission reported the plant was operating Friday at 40 percent of capacity [Linda Dailey Paulson].
* 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.
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