Western Price Survey
November 26, 2008
Electricity and natural gas prices ended Wednesday largely where they started the week as traders weighed a government-led economic rescue, sour economic news, and lower holiday energy demand.
This week, the trading schedule was abbreviated for Thanksgiving. On Monday, power was traded for Thursday delivery and Tuesday electricity was destined to be used from Friday through Sunday. Nighttime prices tumbled on average $2 to $4/MWh this week across the West.
Traders did hang on to a few bright shreds of news and bid oil prices back up. On Wednesday, the price of a barrel of crude oil settled at $54.09, up $3.32 over Tuesday on NYMEX. Oil prices have plunged more than 60 percent this year, since hitting a high of over $147 in July.
This week the U.S. government pledged to invest $800 billion in the credit markets and consumer lending. China also slashed its interest rates by the largest amount in 11 years, while the European Commission approved an economic stimulus package. The Organization of Petroleum Exporting Countries is also meeting on Saturday and may trim production to boost prices.
Nevertheless, analysts predict even lower oil prices. Merrill Lynch trimmed its estimate for crude prices to $50 next year, down previously from $90. Crude supplies rose 7.3 million barrels last week, the Energy Information Administration said, blowing past analysts' expectations of a 900,000-barrel increase.
The U.S. Commerce Department also provided discouraging news on Wednesday. Last month, consumer spending plunged by one full percentage point, the most since the 2001 terrorist attacks.
Benchmark natural gas futures climbed to $6.76/MMBtu on Wednesday, nearly matching Monday's price. West Coast prices nearly matched or slightly exceeded the start of the week by as much as 20 cents (see chart).
Stockpiles of natural gas dropped 66 Bcf to 3.422 Tcf last week, according to the EIA, heralding the first of the winter heating season withdrawal. Western supplies dipped 6 Bcf to 467 Bcf, a level which is 2 percent less than last year but 6 percent above the five-year average.
The holiday week also likely trimmed electricity demand. Demand topped out at 30,900 MW on Monday, according to the California Independent System Operator, and was expected to remain around the same level on Wednesday. Usage is expected to dip to 29,900 MW on Thanksgiving and Friday.
In California, daytime prices dropped about $2 since Monday to average $55 /Wh Wednesday at North of Path 15 and South of Path 15. Nighttime prices settled just above $40/MWh on average, a drop of around $4-$5.
Palo Verde peak prices lost $1.50 to average $45.69/MWh, while off-peak trades ended the week flat.
California got a dose of rain this week, with showers and temperatures in the low 50s and low 60s in San Francisco and Los Angeles on Wednesday. On Thanksgiving, the storm will move into the Southwest, prompting thunderstorms and cooler weather in Phoenix, AccuWeather said.
The Northwest is finally enjoying sunny skies this week, with temperatures in the low 50s in Portland and Seattle. Rain is expected to return later this week.
At the California-Oregon border, peak prices were nearly flat for the week at around $52/MWh, though nighttime deliveries lost $3 since Monday to average $45.10/MWh.
Average Mid-Columbia prime values closed at $49.34/MWh, up 30 cents, while off prime trades shed $2 to $45.43/MWh.
On Sunday, the Columbia Generating Station in Washington State returned to full operation after a five-day closure at the 1,150 MW plant for repairs. In Arizona, the Palo Verde nuclear plant's 1,336-MW first unit was back online on Sunday following a seven-week refueling and planned maintenance outage. But the plant's 1,336 MW second unit was shuttered the same day to repair a leak in the turbine-cooling system. The fix may take several weeks at the 1,336-MW unit. Meanwhile, the San Onofre Nuclear Generating System's 1,080 MW third unit remains offline for refueling and maintenance [Kristina Shevory].
Editor's Note: Today's Western Price Survey report will be the only report this week, owing to the Thanksgiving holiday.
Archives of the Western Price Survey for the past year are also available online.
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