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Western Price Survey

Week's End Edition
December 14, 2012
Natural Gas Goes on Sale, but Power Industry Isn't Buying

Western natural gas prices fell as much as 35 cents since last week after storage levels grew to historically high levels yet again.

Working gas in storage was 3,806 Bcf as of Friday, Dec. 7, according to U.S. Energy Information Administration estimates, a net increase of 2 Bcf from the previous week. Storage levels are now 1.3 percent greater than a year ago and 8 percent above the five-year average.

"The total amount in storage is now the highest for this time of year since the Department of Energy began collecting data," noted Enerfax in a Dec. 14 report.

Barclays analysts say the combination of warm weather and the "unseasonable weekly injection" are suppressing prices. "Although injections in December are not unheard of, it does highlight the impact of warm weather on natural gas demand."

Since last Friday, Henry Hub natural gas values lost 19 cents, trading Dec. 14 at $3.14/MMBtu. Western prices moved even lower, with Ruby-Malin gas dropping 35 cents to $3.18, PG&E CityGate down 33 cents to $3.58 and Southern California Border shedding 18 cents to $3.34.

The U.S. Energy Information Administration forecasts that Henry Hub spot gas will end the year at around $2.78/MMBtu and rise to $3.68 next year, according to the agency's Short-Term Energy Outlook, released Dec. 11.

Barclays analysts largely concurred with EIA estimates and put the average price of natural gas in 2013 at $3.70/MMBtu, predicated on a modest recovery. "A return to normal weather, further growth of industrial consumption, and declining net imports" should "tighten the balances and halve the need for coal displacement next year," according to the firm's Dec. 7 commodities report.

The Short-Term Energy Outlook forecasts natural gas consumption for power generation in 2013 to be 22.6 Bcf/d, a loss of 10.4 percent. This should be offset by increased residential and commercial use of natural gas, however.

Despite the sale in natural gas markets, Western power prices held steady or made slight gains. Here's how average peak prices fared since last Friday:

  • Mid-Columbia: Up $1 to $24.40/MWh.
  • California-Oregon Border: Gained roughly $3.30 to $27.75/MWh.
  • North of Path 15: Rose about $1.80 to $38/MWh.
  • South of Path 15: Up 80 cents to $41.60/MWh.
  • Palo Verde: Lost almost $2.35 to $29.55/MWh.

For off-peak power prices, only Palo Verde values dropped in the trading period, down an average of $1.20 to about $25.40/MWh. COB led gains, up about $6.05 to $26.70. Off-peak prices Friday ranged from $22.65/MWh at Mid-C to $30/MWh at SP15.

Peak demand on the Cal-ISO grid hit 32,090 MW Dec. 13, the week's high, according to the grid operator. Northwest Power Pool peak demand reached 58,485 MW the same day.

What's Ahead: A series of storms will bring continued cool and unstable weather to the West Coast -- Northern California in particular -- well into Thursday, Dec. 20. Cascade and Sierra snow levels will drop early in the week, with the National Weather Service expecting another series of moisture-laden storms as the Christmas holidays approach [Linda Dailey Paulson].

Western Electricity Prices
Week's End: December 10 - 14, 2012
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 13.12-791.15 10.01-24.31
Mid-Columbia 20.75-28 13.25-23.75
COB 24-30 16-26
NP 15* 37.65-41.75 25.50-28.25
SP 15* 38.50-43.75 25.25-30
Palo Verde 26.25-30.25 20.25-25.75

* Prices represent both day-ahead locational marginal prices (financial swaps, or EZ Gen DA LMPs) and quasi-swap prices (EZ Gen) as reported by ICE.

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.

Please contact with questions or comments about this site.

Contact Chris Raphael, editor with questions regarding Price Survey Content.

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