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Western Price Survey

Week's End Edition
November 17, 2006
Warm Weather Drives Down Natural Gas, But Power Prices Rise

The U.S. National Oceanic and Atmospheric Administration on Thursday said that this winter is likely to be warmer than the 30-year norm. In its latest seasonal outlook, NOAA projected that across the states, this winter will be 2 percent warmer than the 30-year average (1971-2000) but about 9 percent cooler than last year. California in particular has "equal chances" of having a colder or warmer winter although this winter in the Golden State is likely to be a bit wetter.

Peak electricity values wobbled midweek, then gained strength in Friday trading. Off-peak prices seemed to steadily climb as the week progressed, and on Friday were 10 mills/kWh or more above Monday trading values.

Daytime power in the South of Path 15 region traded at around 60 mills/kWh Monday, gained a few mills Wednesday, and closed at a high of 65.75 mills/kWh in Friday trading. Nighttime power started the week at 40 mills/ kWh and rose all the way to 57 mills for weekend deliveries.

The prices were nearly identical north of Path 15, where peak power traded at 60 mills/kWh Monday and 65 mills/kWh Friday. Values for low-demand power were at 40.50 mills/kWh for Tuesday deliveries and rocketed to 56 mills/kWh to close out the week.

Off-peak prices showed similar strength at the California-Oregon border. While peak power traded between 56 mills and 62 mills/kWh, off-peak power started at 38.25 mills/kWh Monday and reached 52 mills/kWh in Friday trading.

Daytime power in the Mid-Columbia region traded at 50 mills/kWh Monday, reached a high of 58.50 mills/kWh Wednesday, then lost a few mills the next two days. Nighttime power, at 36 mills/kWh Monday, advanced all the way to 51 mills/kWh for weekend deliveries.

Unit No. 2 of the Palo Verde nuclear plant in Arizona exited a scheduled refueling early this week, and the 1,314 MW unit was listed at about 69 percent capacity on Thursday, according to the U.S. Nuclear Regulatory Commission. NRC officials this week are reportedly visiting the plant, which could face costly repairs.

Power prices dropped a few mills with the Palo Verde unit's return to service. Values for peak power at Palo Verde were at 56 mills/kWh on Thursday, but dropped to a low of 51 mills/kWh the next day. Off-peak prices started the week at 34 mills/kWh, scooted to a high of 44.50 mills/kWh by Wednesday, dropped a few mills Thursday, then gained them back Friday [Chris Raphael].

Gas Prices Fall on Warm Weather-Inspired Storage Injection

Warm weather throughout the U.S. allowed inventories of natural gas in storage to rise by 5 Bcf last week, according to the U.S. Energy Information Administration.

In its weekly natural gas storage report released Thursday, EIA stated that the West gained 4 Bcf and producing states put 5 Bcf in storage, even as the East took out 4 Bcf. The result was a net gain of 4 Bcf in the continental U.S., the first storage gain in three weeks. For the entire Lower 48, stocks of natural gas are 176 Bcf above where they were last year, the EIA stated.

The news sent prices on an autumn dip. December natural gas futures had been trading at $8.12/MMBtu Wednesday, the highest level in over three months. They dropped to $7.55/MMBtu Thursday and were at $7.95/MMBtu Friday.

Permian Basin natural gas, which was trading at a high of $6.56/MMBtu, dropped over 70 cents to a low of $5.85/MMBtu on Friday. San Juan Basin gas bottomed out at $5.67/MMBtu for weekend deliveries after trading the previous day at $6.48/MMBtu.

Southern California border gas took the largest nosedive. It went for $6.78/MMBtu Thursday, but for weekend deliveries was priced at $5.85/MMBtu.

The EIA also is expecting a warm winter the next few months, which, if the prognostication holds, could mean weak natural gas and oil prices (see CEM No. 899 [9.1]). On Friday, December crude-oil futures were at their lowest point in 17 months [C. R.].

Western Electricity Prices
Week's End: November 13 - 17, 2006
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 37.49-668.80 10.06-72.07
Mid-Columbia 50-58.50 36-51
COB 56-62 38.25-52
NP 15 59.25-65 40.50-56
SP 15 58.75-65.75 40-57
Palo Verde 51-56 34-44.50

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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