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Western Price Survey

Week's End Edition
November 9, 2007
Stuffed on Natural Gas Storage, Power Prices Have Couch-Potato Week

A healthy storage injection and robust supplies for this time of year sent natural gas prices into a tailspin this week, as values lost $1/MMBtu and more from their weekly highs. Power prices followed the dive.

Wholesale electricity values climbed from $2 to $6/MWh through Tuesday before slumping. Hubs finished out the week below their opening marks on Monday, with losses ranging from $3 to $5/MWh for peak power and $4 to $8/MWh for nighttime power. Trading this week has been a bit irregular because the markets will be closed on Monday in observance of Veterans Day, which meant traders were buying and selling power a day earlier than usual.

At South of Path 15, peak-power prices started off the week at an average of $67.52/MWh, gained ground on Tuesday, and then lost it all to end the week at $64.09. For off-peak power it was the same story, with prices drifting from $47.62 to $43.68 by Friday.

North of Path 15 power hit an average high of $71.85 on Tuesday, but soured to close out trading Friday at $64.32. Off-peak power kicked off at $48.13, then shed around $5 the rest of the week.

Daytime power for Palo Verde saw less action, but followed the same slumping trend, drifting from around $54 to $51 by Friday. Off-peak power prices traded in the low 40s before settling in the mid-30s.

The California-Oregon Border rocketed as high as $72.85 but, like the other hubs, closed out the Friday session at a low of $61.50. Nighttime was no different, with prices dumping about $8 to rest at 46.01/MWh.

At the Mid-Columbia hub, average daytime prices dropped $10 from a Tuesday high to end the week at $58. Light power lost $8 to close out around $46.

Much of the western United States will see lower temperatures and a chance of rain through Monday. Los Angeles should have temperatures in the high 60s and a slight chance of rain, while Palm Springs will enjoy sun and 70 de-grees Fahrenheit. For Phoenix, temperatures will drop from the high 80s to the mid-70s by Veterans Day. Seattle and Portland will be doused with rain through next week, with highs in the mid-50s.

On Tuesday, the U.S. Energy Information Administration reported that electricity prices are expected to rise by around 2 percent on greater demand and lack of generation. In the agency's monthly Short-Term Energy Outlook, residential power prices are shown climbing to an average of 10.6 cents/kWh. Commercial prices will rise to 9.6 cents and industrial users will see a jump of 5 percent, to 6.4 cents. More electricity will be used this year at an average of 10.7 billion kWh/day, or 2.1 percent over last year. Unseasonably hot weather this summer was the culprit.

One of the two units at the San Onofre Nuclear Generating Station is gradually returning to service. The other unit is still off line, and total capacity has been cut in half to about 1,127 MW. Unit No. 1 at Arizona Public Service's Palo Verde nuclear power plant came back on line on Monday, while Unit No. 3 remains out of operation for refueling. It is not scheduled to restart until late December [Kristina Shevory].

Ample Supplies Keep Gas Prices Low

Natural gas supplies climbed 36 Bcf as warm weather blanketed much of the country and kept heating demand low. A slow hurricane season, which ends Nov. 30, has also helped push up stockpiles and kept production steady.

At 3.545 Tcf, stockpiles are nearly 3 percent above the same period last year and nearly 9 percent above the five-year average, the U.S. Energy Information Administration reported in its weekly natural gas report. In the West, natural gas in storage rose 6 Bcf to 465 Bcf. Despite the rise, there is 0.9 percent less in supplies than last year. Against the five-year average, however, gas supplies are 8.6 percent higher.

Americans are expected to use 4.5 percent more natural gas this year than in 2006, the EIA said. Next year, consumption is predicted to increase by 0.9 percent overall, mostly in the residential sector.

Ample supplies dampened prices, and the EIA outlook on Thursday pushed prices lower. Prices picked up around 40 cents/MMBtu through Tuesday and then promptly gave them back on Wednesday. By Friday, prices at all the Western hubs had lost around $1/MMBtu or more to finish out between $4.97/MMBtu at San Juan and a high of $6.41 at Pacific Gas & Electric's City Gate. There will be no trading on Monday in observance of Veterans Day [K. S.].

Western Electricity Prices
Week's End: Nov. 5 - 9, 2007
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 18.05-304.99 11.23-173.92
Mid-Columbia 56-74 43.50-60
COB 59-76 43.50-60.25
NP 15 61.75-74.2 41-52
SP 15 61-75 41.50-50.50
Palo Verde 49.25-58 35-42.50

Archives of the Western Price Survey for the past year are also available online.


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