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Western Price Survey

Mid-Week Edition
November 23, 2011
Soggy Northwest Winter Predicted

This winter could be déjà vu for Northern California and the Pacific Northwest. A Pacific Ocean La Niña pattern -- typically associated with cooler-than-normal water temperatures -- similar to last year's is expected by meteorologists, meaning another cold, wet winter for the region.

High-water-content snowpack and its subsequent runoff resulted in cheap Northwest electricity in spring 2011. At times, the system was so inundated with hydro that the Bonneville Power Administration was forced to curtail wind generation. That situation could repeat itself next spring, if forecasts for precipitation this winter are accurate, though at least one forecaster notes that this winter will not be as severe as last year's.

The National Oceanic and Atmospheric Administration's Climate Prediction Center is forecasting lower-than-normal temperatures and increased precipitation across the Pacific Northwest this winter, while dry conditions should persist across the Southwest, from Southern California to Texas.

Thomas Downs, a meteorologist with Weather 2000, a private forecasting firm for the energy industry, largely concurs. However, the weather from this December to April will not be as extreme as 2010-11, he says.

It is "a stretch to think that it will be like last year, but there will be significant, above-normal precipitation and streamflows," Downs said.

WSI Corp., a forecasting firm for energy traders, notes December temperatures will be much colder for the West Coast, providing "a sharp boost in gas demand. This will likely pressure gas prices higher."

Chris Kostas, senior power and gas analyst at independent research firm Energy Security Analysis Inc., stated in a press release that "some of the increased demand from the North and West will be offset by the slightly warmer-than-normal temperatures that are expected throughout the South . . . Historically, a colder-than-normal December often translates into firm Henry Hub prices as traders with gas in storage are hesitant to sell significant volumes so early in the season."

This week, however, Henry Hub average pricing finished at $2.83/MMBtu -- down 10 cents since Monday -- as the nation continued record gas storage. Western natural gas prices have not been able to break the $4/MMBtu mark, and the consensus of analysts is that more cold weather will be needed for that. Working gas storage was 3,852 Bcf as of Nov. 18, according to the U.S. Energy Information Administration, a net increase of 9 Bcf from the previous week. Stocks were 23 Bcf higher than last year and 233 Bcf above the five-year average of 3,619 Bcf.

Western peak-power prices lost value in Wednesday-to-Wednesday trading, with California hubs losing a few dollars to end around $29-$30/MWh while Northwest hubs slid a bit below that (see chart). Off-peak prices at California hubs gained a few dollars to end at around $26/MWh, while Northwest values fell about a dollar to end around $26-$27.

BPA's Michael Hansen said the Columbia Generating Station's newly installed turbines, which had been vibrating excessively, were successfully repaired over the weekend, enabling the facility to return to full operations on Monday, Nov. 21 [Linda Dailey Paulson].

Editor's Note: No price report will be published Friday due to the Thanksgiving holiday.


Western Electricity Prices
Mid-Week: November 21 - 23, 2011
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 23.15-912.03 18.63-36.66
Mid-Columbia 26.25-29.75 22-25.50
COB 28-30 23.65-27
NP 15* 31.25-33.20 25.50-26.50
SP 15* 29-31.45 22.75-26
Palo Verde 27.35-31.50 21.50-24

* 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.


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

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