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Western Heat Drives Up NatGas-Fired Power Generation

Sustained widespread heat last week, particularly in the Pacific Northwest, has driven up the electric generation power burn for natural gas along the Pacific Coast from Seattle to San Diego.

On Thursday, temperatures continued to soar toward triple digits in Seattle and Portland, while in California the heat moderated after pushing power demand above the 44,000 MW level on Tuesday and Wednesday for the first time in 10 months. Temperatures cooled over the July 4 weekend, and on Monday, the peak demand forecast was for 34,000 MW.

The increased natural gas demand showed up In NGI's National July Bidweek survey, where California bidweek prices scored the greatest gains, up 16 cents to average $2.99, while all other major regions of the country endured modest declines. Of actively traded points the bidweek location showing the greatest gain was SoCal Citygate with a rise of 21 cents to $3.16.

The California daily average price in NGI’s survey shows a slowly growing trend line upwards from a low point in early June. A Southern California Gas Co. (SoCalGas) spokesperson said the Sempra Energy utilities in California (SoCalGas and San Diego Gas and Electric Co.) had power generation sendout of about 1.5 Bcf both Tuesday and Wednesday.

Early last week, SoCalGas called for an emergency localized curtailment and curtailment watch in the Los Angeles Basin as a way to help manage increased gas demand for electric generation. Early last Thursday, SoCalGas ended the curtailment watch for its electric generation and other noncore large industrial customers.

"The situation highlighted the dependency between natural gas and electricity," the spokesperson said. "Natural gas plays a key role in keeping the lights on in California."

Natural gas for electric generation in the Northwest set records, reportedly last month averaging 636 MMcf/d, compared to the previous record of 207 MMcf/d in June 2013, according to Genscape. The higher volumes are attributable to more new gas-fired generation in the region and below-normal level of hydroelectric power in the Northwest this year.

Poor hydroelectric output throughout the region this year has caused the majority of the uptick in the power burn demand for natural gas, according to the Bonneville Power Administration (BPA). It cited an average hydro generation in June of 170 GWh/d, compared to 280 GWh/d of hydropower in June 2014.

Genscape said lower-than-normal supplies from the region's growing wind power sources added to the need for ever-greater amounts of thermal generation, which for BPA means gas, nuclear or coal-fired generation. While acknowledging that gas-fired power loads are up, utility operators in the region contacted by NGI were reluctant to give specifics on their natural gas loads for power.

"The use of natural gas to fuel electric generation is the largest driver of demand growth [in the Pacific Northwest], as the region develops new gas-fired generation to serve load growth and more flexible gas fired resources to complement intermittent renewable generation like wind and solar," the Northwest Gas Association's recently released 2015 supply-demand outlook said (see Daily GPIJune 15).

The 2015 assessment included two scenarios that explored the potential for accelerated growth in the power generation and industrial sectors. "Looming coal plant retirements and manufacturers seeking access to abundant and affordable North American natural gas led to these additions analyzing potential large changes in demand that do not show up in the regular Outlook data set."

In California, the state grid operator issued Flex Alert conservation warnings for both Tuesday and Wednesday, but drew short of issuing one last Thursday when more moderate power loads were expected.

A spokesperson for the California Independent System Operator said the grid operator has not yet compiled recent statistics on how much more gas-fired generation was used last week in the state.

If Sempra Energy's utilities had the added transmission pipeline capacity they have proposed for Southern California, CAISO would have more flexibility to shift electric generation from impacted parts of the Los Angeles Basin to San Diego, said the SoCalGas spokesperson, citing long-standing proposals before state regulators to expand the transmission pipeline system from the north and the east coming into the Los Angeles Basin and San Diego (see Daily GPIMay 7).

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