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Western Price Survey

Week's End Edition
December 15, 2006
Transmission Falls, Power Prices Up as Winter Storm Lashes Northwest

A fierce winter storm with pounding wind and rain moved into the Pacific Northwest Thursday night, knocking out several 500 kV and 230 kV transmission lines and leaving customers in the dark. About 1.5 million people were without power early Friday in Washington and Oregon, including customers of Puget Sound Energy, Portland General Electric and Pacific Power.

The Western Electricity Coordinating Council reported Friday that the John Day-Marion No. 1 500 kV line was out of service, as was the Buckley-Grizzly No. 1 500 kV line. As a result, southward flows on the California-Oregon Intertie were limited to 3,200 MW. Northward flows were constrained to 2,450 MW.

A converter that went out of service constrained southward flows on the Pacific DC Intertie to 1,956 MW and northward flows to 1,904 MW. The Broadview-Garrison No. 1 and No. 2 500 kV lines also went down, limiting flows on Path 8, which runs between Montana and the Northwest.

The price of electricity responded to the storm with a manifest jump. Mid-Columbia peak power had been trading for between 56 mills and 58 mills/kWh midweek, but rose past 60 mills/kWh in trading on Friday. Off-peak power was priced a bit below 50 mills/kWh until Thursday and Friday, and went between 53 mills and 57 mills/kWh for delivery Monday.

Daytime power at the California-Oregon border traded at about 60 mills/kWh most of the week, but in Friday trading the spread was 63 mills to 67 mills/kWh. Off-peak power was priced at 59 mills/kWh for Monday deliveries, after spending most of the week at around 50 mills/kWh.

The transmission woes also boosted the price of power in California, despite more temperate weather in the state. High-demand power in North of Path 15 traded Monday around 64 mills/kWh, gained a few mills Wednesday, and was between 65 mills and 72 mills/kWh for Monday deliveries. Values for off-peak power were at about 50 mills/kWh through Wednesday, and finished the week between 57 mills and 66 mills/kWh. Prices for South of Path 15 peak power were nearly identical to NP15 values.

In Palo Verde territory, peak power traded for 51 mills to 56 mills/kWh Monday and closed out the week between 55 mills and 61 mills/kWh. Nighttime power had been trading between 40 mills and 42 mills/kWh, but for Monday deliveries values spread from 49 mills to 56 mills/kWh.

The 1,087 MW Unit No. 2 of the Diablo Canyon nuclear plant began to ramp up Friday after a small explosion in the cooling-water pump area on Tuesday. The 1,080 MW Unit No. 3 of the San Onofre Nuclear Generating Station also started to reconnect to the grid Friday after being shut down earlier in the week by a leak in the reactor coolant pump. The unit is exiting a refueling outage that began Oct. 16 [Chris Raphael].

Cold Weather, Storage Withdrawal Pump Up Gas Prices

Natural gas prices gained 20 to 30 cents/MMBtu this week, influenced by cold weather in the West and a storage withdrawal the previous week. The U.S. Energy Information Administration reported a storage withdrawal of 168 Bcf for the week ending Thursday. Eastern states removed 93 Bcf and the West removed 20 Bcf.

Permian Basin natural gas traded at an average of $6.10/MMBtu Monday, reached $6.66/MMBtu midweek, then fell to about $6.31/MMBtu for weekend, low-load deliveries. San Juan Basin gas followed a similar trajectory, settling at $6.30/MMBtu in Friday trading. Southern California border gas began the week at $6.65/MMBtu, went as high as $7.28/MMBtu Thursday, and rested at $6.85/MMBtu for weekend deliveries.

Natural gas at Malin, Ore. traded for an average of $6.86/MMBtu Friday, after going as high as $7.17/MMBtu midweek.

The EIA in a short-term energy outlook released Tuesday reported that natural gas prices are expected to average $8.58/Mcf in the first quarter of 2007, about 65 cents higher than the price in the first quarter of 2006. Average household heating-fuel expenditures will be $938 this winter, about $10 less than last year. The EIA said that declining Canadian production of natural gas will be offset by imports of liquefied natural gas, and net imports will remain static [C. R.].

Western Electricity Prices
Week's End: December 11 - 15, 2006
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 16.82-352.28 9.58-38.43
Mid-Columbia 51.75-63.25 46.25-57
COB 58.25-67 49-59
NP 15 59.25-72.25 47-66
SP 15 57-72 45.50-66
Palo Verde 51-61 40-56

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

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