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Western Price Survey

December 14, 2007
Cold Weather Boosts Prices

The U.S. Energy Information Administration released its short-term energy outlook Tuesday, saying that residential electricity prices are expected to be around 11 cents/kWh in 2007 -- approximately 2 percent higher than last year. Prices were predicted to grow at a slightly lower rate next year because many states have postponed plans to let price caps expire.

The EIA also stated that total natural gas consumption would likely increase by 5 percent in 2007, largely from the use of natural gas as electricity fuel. Spot prices at the Henry hub are projected to reach a winter peak of $8.22/Mcf in January 2008.

This week, the relationship between gas values and electricity prices was on display as a lineup of storms that dumped snow and ice across the country drove up heating demand, and with it electricity values.

Following the path of the storms, electricity prices gained from $3 to $6/MWh, then took a breather for two days. On Friday, values widely diverged with geography. In the Pacific Northwest, where three more storms are expected, prices clawed back, but not enough to eclipse Tuesday's peaks. California and Arizona values took a siesta and fell even lower.

Peak power at the California-Oregon border traded Monday at an average of $74.93/MWh and finished the week at $76.17. Off-peak added about $5 to $65/MWh on Tuesday, but dipped to $63 Friday.

At the Mid-Columbia hub, daytime power climbed nearly $3 to about $74/MWh, slipped $2, then gained it back. Nighttime power ended the week on a high of $64.24.

South of Path 15 picked up $3 to average $76.50/MWh on Tuesday, then fell back to $75.90. Nighttime power hit its high of $63.25. North of Path 15 prices were nearly identical to those at SP15.

Only at the Palo Verde hub did prices continually gain through the week, with peak values rising from an average of $57.18 on Monday to $67.63 on Thursday. Off-peak power prices never faltered, climbing $8 to $55.36/MWh on Friday.

What's Ahead: Another wave of strong storms arriving from the Pacific is expected to pummel Oregon and Washington Friday before marching across the United States. One storm arriving on Monday should veer south, bring rain to San Francisco and then creep into Los Angeles Tuesday. Temperatures in both California cities should be in the high 50s to low 60s. Palm Springs and Phoenix should escape the rain and bask in sunny skies and temperatures in the mid- to high 60s.

As for nuclear power, Diablo Canyon is back to full power after ramping down capacity last week at its two 1,100 MW units because high ocean waves clogged intake valves with seaweed and grasses.

Last weekend Palo Verde kick-started its 1,311 MW Unit No. 1 after replacing a heater drain pump. Its Unit No. 3 remains shuttered for maintenance and won't return to full production until later this month. San Onofre still has its 1,070 MW Unit No. 2 down for maintenance and to replace spent fuel. Look for it to come back on line within a month [Kristina Shevory].

Natural Gas Prices Climb on Cold Weather, Lower Supplies

Frigid weather in much of the country drew down natural gas supplies last week. The Northeast, Middle Atlantic and Midwest were pummeled by below average temperatures, forcing many people to crank up thermostats to stay warm.

Natural gas, which is used by most American homes and businesses for cooling and heating, dropped 146 Bcf to 3.294 Tcf, the Energy Information Administration said in its weekly report. Although stockpiles are decreasing, they remain 1 percent higher than in the same period last year.

In the West, while natural gas in storage slid 10 Bcf to 453 Bcf, there is still about 5 percent more stockpiled than last year.

Prices climbed through Thursday, hitting a peak of $7.62/MMBtu at Pacific Gas & Electric's City Gate hub. Rising oil prices and cold weather in much of the country supported rising prices, and values at other trading centers were in the mid- to low $7 range on Thursday. But on Friday prices dipped as traders cashed out. Forecasts of warming temperatures next week also helped take the wind out of prices, shaving them by about 40 cents/MMBtu [K. S.].

Western Electricity Prices
Week's End: December 10 - 14, 2007
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 27.48-946.66 11.23-49
Mid-Columbia 68-76 57-68
COB 72.25-79 59.50-65
NP 15 71.50-80 53.25-63.50
SP 15 70.50-79.50 52.75-63.25
Palo Verde 56-70 45.50-56.25

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 Chris Raphael, editor with questions regarding Price Survey Content.

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