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Western Price Survey

Week's End Edition
December 4, 2009
Power Prices Rise for the Week; Forecasters See Cold Week Ahead

It appears winter is finally here, for energy traders. Electricity prices advanced this week as forecasts called for frigid weather next week, with expectations of higher demand.

By late Sunday, arctic air will reach California, bringing rain, colder weather and the potential for mudslides and snow to the Golden State, AccuWeather reported. Temperatures will drop to the low 60s in Los Angeles, and will remain in the low 50s in San Francisco, according to the National Weather Service. Phoenix will see rain on Monday and temperatures will remain in the low 60s.

Peak power demand crept up from 30,900 MW on Monday to 31,200 MW on Thursday, according to the California Independent System Operator, and was projected to be around 30,500 MW on Friday.

In California, daytime prices increased more than $4 to $51.90/MWh at North of Path 15 and added $3 to reach $49.83 at South of Path 15. Trades for nighttime power climbed about $5 to $42.20/MWh in the north and around $6 to $39.58 in the south.

Palo Verde values for peak power rose $1 to an average of $42.71/MWh, while trades for off-prime power added $2 to $35.99.

As frigid air from Canada sweeps south this weekend, temperatures in the Northwest may dive to freezing levels, AccuWeather said. Average Mid-Columbia prime values climbed $11 to $54.48/MWh, while off-prime trades added $10 to $44.23.

At the California-Oregon border, peak prices jumped $5 to an average of $60.60/MWh. Average trades for nighttime power rose $9 to $45.92.

Despite the cold weather, increases in spot natural gas prices in the West were modest, rising 15 cents/MMBtu or less for the week at key hubs. Malin gas traded between $4.85 and $4.99/MMBtu on Friday, while the PG&E CityGate price moved between $5.20 and $5.28.

Last week, 2 Bcf of natural gas went into storage thanks to lower demand during a holiday week and milder-than-usual weather in most of the country, according to the U.S. Energy Information Administration. Once again inventories hit a fresh record high of 3.837 Tcf, marking the seventh straight week that storage hit record levels across the country. Stockpiles are 14 percent higher than last year, and 14.5 percent higher than the five-year average.

Usually, cold weather and a bump in heating demand forces natural gas to be withdrawn from storage, but inventories are at 99 percent of the estimated peak capacity in the country.

The supply glut has forced down prices. Last week, the December delivery contract on Nymex expired at $4.46/MMBtu, the second time a contract for the heating season closed below $5/MMBtu since 2003.

In the West, working natural gas in storage bumped up by 1 Bcf to a fresh high of 526 Bcf, leaving inventories 13 percent higher than last year, or 17 percent above the five-year average.

Although low prices have led natural gas companies to shut down rigs, production continued on a brisk pace for much of the year, according to the EIA. For the first three quarters of the year, natural gas production hit 16.471 Tcf, up from 15.870 Tcf for the same period last year. As production climbed, prices have plummeted, hitting an average wellhead price in September of $2.92 Mcf, the lowest point since August 2002.

Palo Verde's 1,336 MW third unit was powered down late Thursday after the containment isolation valve closed. There has been no date given for its resumption of full power. Since Wednesday, Palo Verde's 1,336 MW second unit has been returning to full power after its reactor head was replaced. It was at 38 percent capacity on Friday. The San Onofre Nuclear Generating Station's 1,070 MW second unit remains sidelined as its two steam generators are replaced [Kristina Shevory].

Western Electricity Prices
Week's End: Nov. 30 - Dec. 4, 2009
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 24.68-535.89 13.01-52.79
Mid-Columbia 41-58.50 33-45.75
COB 44.50-63.50 34-47.5
NP 15* 43.25-52.50 35.25-42.50
SP 15* 43-50.50 33.50-39.75
Palo Verde 40-45 30.75-38.50

* 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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