Western Price Survey
December 6, 2013
Western natural gas climbed above the $4 mark and Northwestern power values topped national prices as temperatures plunged to frigid, record lows throughout the West.
Record cold was observed in many locations over the trading week. Crater Lake and Sisters, Ore., dropped to -2 °F, for example, while Modoc County's Jess Valley, Calif., tied its record low of 0 °F. On Dec. 5, downtown Oakland reached 33 °F and Gilroy saw 26 °F. Record low temperatures are expected to persist in the West through at least Dec. 9.
"It is not so much that it has never gotten this cold in the region before," noted AccuWeather.com Western weather expert Ken Clark, "but rather it rarely gets this cold this early in the winter season."
In the Nov. 28 to Dec. 6 trading period, natural gas prices in the West rocketed. Opal/Kern climbed 76 cents to $4.46/MMBtu, while EP-San Juan jumped 74 cents to $4.38 and PG&E CityGate added 38 cents to $4.40 by Dec. 6. The climb in the West significantly outpaced Henry Hub, which was up almost 20 cents to $3.98/MMBtu over the trading period.
Several factors, which Barclays analysts say are temporary, caused these price increases. In addition to cold weather boosting demand, freeze-offs could affect natural gas production, they noted.
Working gas in storage reached 3,614 Bcf as of Friday, Nov. 29, according to U.S. Energy Information Administration estimates, a net decrease of 162 Bcf from the previous week. Storage levels are now 5.2 percent less than a year ago and 2.8 percent less than the five-year average.
Western hubs' daytime power prices jumped between $21 and almost $40 in the Monday-to-Friday trading period. California-Oregon Border led gainers, up $39.70 to an average of $88.30/MWh by Friday, Dec. 6 (see chart). The same day, Mid-Columbia posted a high spot price of $100/MWh.
Off-peak power prices also soared, with COB adding $32 between Dec. 5 and 6 alone. Average prices for off-peak power Dec. 6 ranged from almost $52 at SP15 to $85.40 at Mid-Columbia.
With the frigid weather, Cal-ISO increasingly relied on thermal generation and less on imports (see "Power Gauge," next page).
Looking back at November, peak-power prices across the West were generally higher than in November 2012. Meanwhile, Western natural gas prices varied nominally in comparison to November 2012.
What's Ahead: Freezing conditions could persist from Central California into the Los Angeles area until Dec. 11. Between Dec. 11 and 15, above-normal precipitation is expected from Washington into Northern California [Linda Dailey Paulson].
Archives of the Western Price Survey for the past year are also available online.
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