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Western Price Survey

December 8, 2017
California Fires Spark Energy Prices

Power-transmission disruptions due to wildfires, continuing Aliso Canyon storage restrictions, and planned and unplanned natural gas pipeline outages conspired to fuel sharp increases in Southern California energy prices this week.

The combination of factors is pressuring Southern California CityGate gas prices, which increased $1.58, or 26.6 percent, to reach $7.50/MMBtu between Nov. 30 and Dec. 7. Prices at the hub reached an all-time high price of $9.65/MMBtu Oct. 24, noted U.S. Energy Information Administration analysts in a Dec. 5 report. This volatility has prompted California Energy Markets to begin tracking the hub on our weekly natural gas price table.

Extreme Santa Ana winds whipped the Southland fires. Four transmission lines in Ventura County were impacted by the Thomas Fire, the largest of the blazes, but the lines, which went off line around 10 p.m. Dec. 4, were back on line early the following morning. The California Independent System Operator has declared a transmission emergency each weekday since the fire erupted due to the emergency in Ventura.

The fires contributed to power outages for some 14,503 Southern California Edison customers as of Dec. 6. By 9 a.m. Dec. 8, there were roughly 10,300 customers without power (see story at [13]).

“There’s no doubt weather events and fires can have a substantial effect on prices anywhere,” said Travis Miller, equity strategist for energy and utilities with Morningstar Research Services, “but California markets are subject to wide price swings when the system has constraints.”

Working natural gas in storage was 3,695 Bcf as of Dec. 1, according to EIA estimates. This is a net increase of 2 Bcf compared to the previous week. Storage levels are now 6.7 percent less than a year ago and 1 percent less than the five-year average.

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This is the first time a net addition has occurred in December since 2012, the EIA said, noting that working gas stocks in the Pacific region are 40 Bcf lower than their five-year average level.

Henry Hub gas spot values dropped 15 cents to $2.79/MMBtu between Nov. 30 and Dec. 7.

In Thursday-to-Thursday trading, Western prices varied. While Southern California CityGate natural gas gained the most among Western hubs, Alberta natural gas lost the most in the trading period, down 22 cents to $1.23/MMBtu by Dec. 7.

Meanwhile, Western daytime power prices generally gained between a penny and $2.65 after peaking midweek. South of Path 15 gained the most, up $2.65 to $51.70/MWh.

Off-peak prices jumped between roughly $7 and $12 in trading. Mid-Columbia saw the greatest gain, adding $5.15 to reach $24.05/MWh. –Linda Dailey Paulson.

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 Mavis Scanlon, editor with questions regarding Price Survey content.

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