With spring arriving, the 2008 Pacific Northwest snowmelt -- and its impact on power and gas markets -- is unusually late this year, according to Bentek Energy LLC. Cool and dry spring weather, combined with available water within the normal range will moderate the impact of seasonal runoff on regional gas and power prices, the consultant said.
However, uncertainty in Pacific Northwest energy markets will remain high due to factors such as unexpected weather developments, plant outages and power transmission constraints, the research and analysis firm said.
"The No. 1 question in the Pacific Northwest this time of year is always 'when will the water run,'" said Kim Ward, Bentek senior analyst. "This is one of the most important events influencing the Pacific Northwest energy market each year. When the snowmelt begins, power generation increases, the demand for gas-fired generation declines and gas prices typically soften. This year, flows over The Dalles Dam are not expected to impact the market at least until May 1, a full month later than last year."
In late March Raymond James & Associates said it expected reduced gas demand this summer due to increased hydroelectric output (see NGI, April 7). The long-term outlook for increased gas-fired demand "is still very robust," said analyst J. Marshall Adkins, but "it is fair to say that increased hydro this year will offset much of the underlying gas-fired electric demand growth that has occurred over the past two years."
Hydropower facilities are responsible for up to 60% of power generated in the Pacific Northwest, and the uncertainty of water flow patterns creates a power supply scenario unlike anywhere else in North America, Bentek said. The availability of hydropower is a function of several factors. The runoff from melting snow in the region is the most important of these. In past years the advent of runoff has been the major driver of a sharp divergence in area power prices; this year, with runoff delayed until well into maintenance season, other factors such as plant outages and local weather developments are expected to overshadow the release of water as a primary determinant of regional energy pricing, the firm said.
Bentek has launched a daily report and alert service, called the Pacific Northwest Observer, which assesses factors impacting regional power and gas prices, including natural gas capacities and flows, weather forecasts, power transmission constraints, water levels behind key dams, water management for fish passage activities and planned outages at coal and nuclear power plants. Bentek has partnered with Industrial Info Resources (IIR) to provide plant outage data in the Pacific Northwest Observer. Currently IIR indicates that outages at one coal plant and one nuclear plant are influencing the Pacific Northwest market, while three major area coal plants will be out in the next month.
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