Wholesale power prices in state fell 18% in 2006

California wholesale power prices fell almost 18% in 2006 despite a killer heat wave that is said to occur once in every 57 years, according to an independent report conducted for the state electrical grid manager.

The California Independent System Operator, in a report by its department of market monitoring, said Thursday that the average price in 2006 was $47.55 per megawatt-hour, down from $57.83 in 2005.

“The lower costs in 2006 are due primarily to reduced costs for natural gas and a prolific year for hydroelectric production,” the agency said.

Its figures are for the average of off-peak power prices, which are lower than the peak power prices that apply during high-demand business weekday hours.

The report also showed that for the fifth year in a row -- since the energy crisis of 2000-01, when prices soared past $300 per megawatt-hour -- there was “stable and healthy competition in the spot markets.”

California’s grid set a record for use in July, as did most utilities in the state. More than three dozen people died as a result of the scorching temperatures. The heat storm hit both Northern and Southern California.

No major outages were associated with the high-voltage power lines of the grid. Rather, distribution lines in neighborhoods and substations blew out because of overheating and overworking. More than 2 million homes and businesses were without power at one point or another during the heat storm.