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Western Price Survey

Week's End Edition
December 12, 2008
Arctic Air Takes Power Prices Higher

Storms and cold air lifted electricity prices in some Western hubs this week by $20 to $30/MWh, bucking dour economic news and predictions of an even deeper recession.

Natural gas prices in the West rose from 20 to 40 cents/MMBtu over Monday, with average values on Friday extending from $4.75/MMBtu at the Permian Basin to $5.91/MMBTu at Pacific Gas & Electric's CityGate. At NYMEX, benchmark natural gas prices were more or less flat this week at $5.53/Mcf, down only 3 cents from Monday.

Arctic air and an arriving Pacific storm will combine to bring rain and then snow to Portland and Seattle today. Through the weekend, as much as a foot of snow will fall in the Cascades, AccuWeather said. Temperatures will dip from the mid 40s to the low 30s in Portland and Seattle.

At the California-Oregon border, peak electricity prices skyrocketed $28 to average $78.64/MWh on Friday. Average off-peak values climbed more than $19 to $60.83/MWh.

Prime Mid-Columbia values shot up nearly $30 to an average of $78.37/MWh. Off-prime values hiked by about $22 to $62.55/MWh.

The cold air will push into California and the Southwest this weekend, leaving temperatures in the high 40s in San Francisco and the high 50s in Los Angeles. Showers may also be likely. Phoenix will see temperatures fall from the 70s into the high 50s.

In California, average daytime prices closed out the week $17 higher at $67.35/MWh for North of Path 15 and $16 to $65.97for South of Path 15. Nighttime trades rose more than $12 to average $52.04 at the northern hub and $11 to $46.10/MWh in the south.

Peak Palo Verde prices etched out an average $8 increase to $50.96/MWh. Off-peak closed at an average of $38.04, up more than $8.

Power demand in California has remained relatively consistent this week, falling steadily from a high of 32,500 MW on Monday to 32,100 MW on Thursday, the California Independent System Operator reported. Usage is expected to drop even further to 31,900 MW on Friday and then to around 31,200 MW this weekend.

This week, the U.S. Energy Information Administration said the economic recession will be longer and deeper than its projection in November. As a result, crude prices will average $51 per barrel next year, sharply down from last month's prediction of $63.50. Petroleum consumption is expected to dip by 5.8 percent, or 1.2 million barrels per day.

Natural gas usage is expected to remain flat next year despite a 1 percent increase in domestic production. Average benchmark prices, which have sunk from $13.06/Mcf in June to $6.87 in November, are projected to be $9.17 this year and $6.25 next year, according to the EIA.

Since this summer, natural gas prices have been hammered thanks largely to the economic meltdown and resulting lower demand among industrial users and homeowners. 3M and Dow Chemical, which use natural gas to make their chemical products, this week said they would shut down more than 20 factories and temporarily sideline 180 others thanks to a drawdown in demand. Last week, DuPont had similar news.

There was 67 Bcf of natural gas withdrawn from storage last week, the EIA said, nearly 50 percent lower than last year thanks to warm temperatures in much of the country and lower industrial use. At 3.291 Tcf, supplies are 1.3 percent less than last year but 3.5 percent higher than the five-year average.

In the West, stockpiles inched down a modest 1 Bcf to 465 Bcf, leaving them 2 percent higher than a year ago and 11.8 percent above the five-year mark.

Electricity usage this year will be nearly even with 2007, but drop next year, the EIA said. Spot electricity prices are predicted to inch up 6 percent this year and 5 percent next year.

Palo Verde's 1,336-MW No. 2 unit has been closed for two weeks for repairs to its turbine-cooling system, and no date has been given for its resumption. The San Onofre Nuclear Generating System's 1,080 MW No. 3 unit is still offline for scheduled maintenance and refueling [Kristina Shevory].

Western Electricity Prices
Week's End: December 8 - 12, 2008
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 25.78-190.37 15.09-84.68
Mid-Columbia 46-81 40-65.50
COB 48.25-82 40-65
NP 15 48.50-69 37.50-53
SP 15 48.25-68.25 32.50-47.25
Palo Verde 41-52.50 26.50-41.40

Archives of the Western Price Survey for the past year are also available online.


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