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West Coast Gas, Power Surge on Frigid Northwest Cold Forecasts

Feb. 5 (Bloomberg) -- West Coast spot natural gas prices surged to records and propelled electricity prices higher as forecasts showed frigid air sweeping into the Northwest.

Gas rose from Oregon to California as Frontier Weather Inc. said Portland and Seattle will test daily temperature records this week.

Electricity use in the Pacific Northwest will increase by about 1.5 percent to 34,100 megawatts tomorrow, the highest for 2014 so far, according to Genscape Inc., which tracks power markets.

“Potentially record-breaking low temperatures in Seattle, Portland, and the Pacific Northwest have pushed load to very high levels, testing the limits of available generation and fueling some of the strongest mid-Columbia prices on record,” said Dennis Lucey, an analyst with Genscape in Boston. “The very cold temperatures this winter have led to higher natural gas use for heating and power production.”

Spot natural gas on the Ruby pipeline to the Malin, Oregon, hub in the Northwest more than tripled, climbing $21.54 to settle at $29.4505 per million per million British thermal units on the IntercontinentalExchange after intraday prices rose to $35, data compiled by Bloomberg show. Both intraday and closing prices were the highest in ICE data going back to 2001.

On-peak power at the mid-Columbia hub in southern Washington state near the Oregon border doubled, advancing $110.94 to $216.32 a megawatt-hour for tomorrow on ICE, the most since April 30, 2001.

Cold Weather

Northwest cities may see temperatures fall about 15 to 20 degrees below normal tomorrow through Feb. 8, said Jim Southard, meteorologist with Frontier Weather in Tulsa, Oklahoma. Portland’s high on Feb. 6 may be 28 degrees Fahrenheit (minus 2 Celsius), the lowest high reading for the date since 1948, while Seattle’s reading may reach 33 degrees, falling below the 1949 record of 37 degrees, he said.

“The situation in the Pacific Northwest is affecting California,” where gas prices have been driven higher because of lower nuclear power output as a drought reduced hydroelectric production, Lucey said. “These factors have also led to triple-digit pricing” at the northern and southern California power hubs, he said.

PG&E Corp.’s Diablo Canyon 2 nuclear reactor was shut on Feb. 2 to repair the unit’s lightning arrestor, equipment on the non-nuclear side of the plant that supports moving power to the grid, according to Kristin Inman, a company spokeswoman. Unit 2, about 160 miles (257 kilometers) northwest of Los Angeles, has nameplate capacity of 1,164 megawatts.

San Francisco

On-peak electricity for tomorrow at Northern California’s NP15 hub, which includes San Francisco, gained $106.38 to $193 a megawatt-hour. Power at the SP15 hub, which includes deliveries to Los Angeles and San Diego, surged $77.40, or 92 percent, to $161.68. Both hub prices were the highest since July 3, 2007.

Spot gas also surged to all-time highs in California, Wyoming and Colorado while gas at Canada’s AECO hub for deliveries to the U.S. jumped to the most in six years.

In Northern California, spot gas at PG&E’s Citygate more than doubled, rising $13.73 to settle at $21.7889 after intraday prices surged to $35. Southern California Gas Co.’s Citygate price gained 62 percent to settle at $11.9394 after intraday prices climbed to $30.

To contact the reporter on this story: Naureen S. Malik in New York at nmalik28@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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