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Western Price Survey / Archives

December 10, 2004
Warmer Weather, Ample Supply Dampen Prices

By the middle of this week--with normal seasonal temperatures returning to the northern half of California and a dip in the price of natural gas--power prices at most trading hubs in the West sagged. The price of electricity in the daily wholesale markets ticked downward by anywhere from 2 to 10 mills/KWh over the first three days of the week.

Last week's freezing temperatures in the Northern California lowlands have abated. A series of storms that moved through the region this week brought snow to the Sierras and rain to the lower ele-vations, leaving the area both wetter and warmer. The rise in the mercury also dropped demand for natural gas and electricity, putting a damper on prices.

Still, the up-then-down-then up nature of prices continued as the week wore on. For instance, though Thursday's trading was for deliveries over the weekend and typically prices record a dip on that day, they actually moved up from Wednesday's low.

North of Path 15, peak power attracted as much as 69.25 mills/KWh on Monday before dipping to a range of 59 mills to 62 mills/KWh on Wednesday. By Friday the price was mark up to 66 mills/KWh. Nighttime power in the region changed hands for between 52.25 and 54.25 mills/KWh at the start of the week, slipped to between 48.25 mills and 49 mills/KWh at midweek and closed out Friday at 53.50 mills/KWh.

Peak power for delivery south of Path 15 traded within a slim range of 67 mills and 69.25 mills/KWh to open the week. By Wednesday the price had dropped but the range had widened. Peak power at SP15 changed hands for between 58.50 mills and 66.75 mills/KWh on that day. Thursday brought prices in the low 60s and Friday saw the cost of power at the hub move up to 65.50 mills/KWh. Low-demand power drew between 52.50 mills and 53.75 mills/KWh on Monday before shedding about 5 mills during the following two days. SP15 off-peak power drew between 48 mills and 50.75 mills/KWh on Friday.

Palo Verde power prices also sagged during the first half of the week, moving from a high of 63.50 mills/KWh on Monday down to between 48.75 mills and 52.25 mills/KWh on Wednesday. The price stays close to that mark the rest of the week. The ramping up of Unit No. 3 at the Palo Verde nuclear power plant contributed to the weakening in the price for electricity in the Southwest. On Friday morning the unit, which had been on a planned, refueling outage, was at 70 percent output, according to the Nuclear Regulatory Commission.

The price for power in the Northwest also lost value this week. At Mid-Columbia, peak power changed hands for between 53 mills and 55 mills/KWh on Monday, ran up to 57.75 mills/KWh the following day, and then settled between 49.25 mills and 52.25 mills/KWh at the end of the week. Off-peak power prices hovered near the 50 mills/KWh mark early in the week before sagging to between 45 mills and 47.25 mills/KWh at the end of the week.

Nuclear units at both Diablo Canyon and the San Onofre Nuclear Generating Station remain off line for refueling. Also out of service during the week were AES' 332 MW Alamitos No. 3 unit and the Mohave facility's 790 MW Unit No. 2. Duke's Moss Landing Units No. 6 and No. 7, each rated at 755 MW, were also off line early this week, but returned to service by Wednesday. Moss Landing No. 7was off line on a scheduled outage Thursday. The Department of Water Resources' 933 MW Hyatt-Thermalito pumped-generation facility was curtailed by 858 MW at the start of the week, in-creased available capacity throughout the week, but by Friday its output was again ratcheted down by 858 MW [Shauna O'Donnell].

Coming Decade to Bring Higher, then Lower Gas Prices

The Energy Information Administration released its Annual Energy Outlook 2005 report this week. The agency is predicting a rise, then fall, then rise, in the price for natural gas in the next five years. Demand for natural gas, however, will continue to grow unabated in the next 20 years

According to the report, the average wellhead price of natural gas will reach $5.30/MMBtu in 2005, up from $4.98/MMBtu in 2003. The EIA estimated the prices would decline to $3.64/MMBtu between 2005 and 2010 because of increased supply. By 2025 the price would reach $4.79/MMBtu.

Gas consumption in the United States will grow from 22 Tcf in 2003 to nearly 31 Tcf by 2025, said the report. "The growth in US natural gas demand will predominantly be met by increased imports of liquefied natural gas and Alaska natural gas," said the report.

As for this week, the EIA released its weekly underground storage report on Thursday. The report reflected removal from storage of 88 Bcf for the week ending December 3, an indication that the win-ter-withdrawal season is now fully upon us. Still, storage figures for US underground gas storage shows the current amount stored to be 12 percent more than the five-year average of 2,868 Bcf. The current amount in storage is 3,211 Bcf. A year ago at this time, 2,984 Bcf was in storage [S. O'D.].

Western Electricity Prices
December 6 - 10, 2004
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 16.85-320.73 10.54-149.41
Mid-Columbia 49.25-58 45-52.75
COB 55-60 46.50-55.50
NP 15 59-69.25 46.75-54.25
SP 15 58.50-69.25 45.50-53.75
Palo Verde 48.75-63.50 40-48.75

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 Shauna O'Donnell, editor with questions regarding Price Survey Content.

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