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Western Price Survey

Week's End Edition
November 14, 2008
Energy Prices Nosedive With Economy, Less Power Demand, High Gas Storage

On Wednesday, natural gas for December delivery closed at $6.31/MMBtu, the lowest price for any December contract since 2003.

Flagging commodities prices, a result of the economic downturn, have helped to shave natural gas trades and keep them low. Americans will reportedly trim their use of petroleum products by more than 5 percent this year and 1.3 percent next year -- more than twice the U.S. Energy Information Administration's previous forecast. Crude prices have been etching new lows this week. On Wednesday, the front-month contract tumbled to a near-22-month low of $56.16 a barrel and ended the week slightly higher at $57.84. Natural gas benchmark futures lost nearly $1 this week to $6.35/MMBtu.

Meanwhile, natural gas in underground storage rose by 62 Bcf last week -- the highest injection in November since data was first collected 14 years ago -- to 3.467 Tcf, the EIA said. Warm weather and sluggish demand helped boost stockpiles last week and left them more than 3 percent higher than the five-year average. They currently stand 2 percent lower than last year.

Western supplies inched up to 461 Bcf, up by 4 Bcf, and are now 5 percent above the five-year average but 2 percent lower than last year.

The EIA forecasts the benchmark natural gas contract to average $9.27/Mcf this year and $6.82/Mcf in 2009, as demand cannot match high domestic production. Consumption is expected to taper off by more than 2 percent among industrial users and 1 percent among utilities, and to slightly grow among home and business owners.

Power markets followed the natural gas market lower. Average daytime prices lost $12 to $50.47/MWh for North of Path 15 and $13 to $49.36/MWh for South of Path 15. Nighttime prices shed about $5 to an average of $41.74/MWh in the north and $40.84 in the south.

Meanwhile, Palo Verde prime values skidded $15 to average $35.20/MWh. Average off-prime trades were down $8 to $30.58/MWh.

Electricity demand in California was relatively flat this week, rising from 30,600 MW on Monday and Tuesday to 31,100 MW on Wednesday and 31,500 MW on Thursday, the California Independent System Operator reported. Usage was expected to creep up to 32,200 MW on Friday and to hold steady through the weekend.

Western Oregon and Washington state finally got a break from the rain today. A high-pressure dome is sitting over the region and shuttling all the storms into Canada. Two weeks of rain have led to widespread flooding, with some areas receiving as much as three times the average amount of rainfall they typically receive, according to AccuWeather. Seattle and Portland temperatures are remaining in the mid-50s.

The rain and cool weather didn't seem to have much effect on power prices in the Northwest this week. At the California-Oregon border, peak prices rose only 12 cents to an average of $52.93/MWh. Average off-peak prices inched up $1 to $46.21/MWh.

The Mid-Columbia trading hub saw prime values increase about 60 cents to an average of $48.52/MWh. Average off-prime trades added nearly $2 to $44.25/MWh.

The high-pressure band in the Northwest has had another effect: kicking up the Santa Ana winds in Southern California, AccuWeather said. The winds, expected to gust to 70 mph, touched off a wildfire southeast of Santa Barbara that has burned 100 homes and 1,500 acres, according to the state Department of Forestry and Fire Protection. Through Sunday, Los Angeles and the rest of the region will see gusty winds and temperatures in the low 90s.

Temperatures in San Francisco will fall from the high 70s Friday and Saturday into the low 70s on Sunday. Phoenix will be sunny and warm, with temperatures in the low 80s.

The San Onofre Nuclear Generating Station's third unit and Palo Verde's first unit remain closed for refueling and maintenance for seven weeks. On Saturday, the 1,150 MW Columbia Generating Station in Washington will close for five days for steam-valve repair and other work [Kristina Shevory].

Western Electricity Prices
Week's End: November 10 - 14, 2008
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 17.06-111.88 14.70-173.28
Mid-Columbia 42.25-50 35-45
COB 48.50-55 37-47.25
NP 15 43.50-66 38-47.25
SP 15 45.20-65.50 36-47
Palo Verde 34-52 28.50-40.25

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


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

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