Mike’s Take – Sep 30

Good Morning,

End of Q3 today, one for the record books, and one which will shape trading for years to come.  Most remarkable, to me at least, was how well BPA and Powerex managed their systems through an extremely dry year.  Back in the day, back when someone was so foolish as to give me VaR, a 2015 type year would have had more than one cash rally, but it didn’t because Powerex relentlessly sold all summer long and BPA returned a virtuoso performance in managing its system.  I suspect June will never get sold down like it has in the past …at least for a year or two…after this last year’s runup at the end of the month.  That is probably an opportunity because the June dailies will settle in the single digits again, many times, though probably not much in 2016 if El is dry, which we are modeling it will be.  Enough of my ramble/babble … on to today’s market.  Starting with weather, beginning with the MidC, I see a forecast that is quite placid, perhaps even flacid:


If anything it is touch more bearish than yesterday’s and pretty much dry through the period of forecast reliability (0 to 10 days?).  Down south it gets more interesting – SP15 shows a material drop in max temps and a decent sized rain event:


From the high 90s to the 70s, and add in a storm – hard to find the bullish lining in that forecast.  Speaking of precip, check out the forecast for Lake Tahoe:


Yes, that is almost two inches of precip in the Sierra Nevada’s over the next couple of days.  El Nino, anyone?  Our friends in the Golden State would have given their left grape and a couple first born for that kind of precip last year … now they getting it before they should and we think there is a lot more where that is coming from (the wet and warm Pacific).  Yeah, we know, it is too early to start thinking El Nino is going to change the fundamentals but its worth watching and planning for.  Also worth watching are loads … NW loads are actually up a touch:


While the south has taken a tumble as it stumbles back to climo – dropping 3-4kmw from last week’s peak:


At least the renewables are down a scoch rendering a slight, very slight, bullish tone to this outlook:


Another interesting twist to the current plot is imports into California – these are off nearly 3000 MW on the peak:


About 2000 of this is coming from cuts in the AC and DC, the rest from Palo and Mead.  It’s almost as if CA doesn’t need the energy, and with cooler temps coming, they will need even less …. DC is down …so what you must be asking.

On the product front we will be rolling out a few new reports next week:

  1. Control Area Forecasts by Day – this report will return load, hydro, and wind energy forecasts by day (on and off) for 38 WECC control areas.  We currently are publishing hourly data for the same control areas.  The report will be especially interesting as the water year plays out as you will be able to watch which utilities are getting long and short based upon the current snow pack.
  2. WECC “Actual” Loads – we currently publish actual loads for about 70kmw peak (60% or so); this new report will publish “actual” loads for 100% of the WECC using our internal algorithms that regress all the “dark” utilities (those that don’t publish actuals) to the ones that do.  I’ve seen the data, it’s quite interesting.

In closing I want to thank the nine companies that joined Ansergy this month – we appreciate your business .