Good Morning,
It’s shaping up for a cold Thanksgiving, the first breath of Winter will arrive on Monday, though it is short-lived:
This event is cold, teens on the east-side of the Cascades, but in the latest models don’t keep the cold around too long:
At best this acts as a reminder of what could be, but hasn’t been. The cold weather, driven by that blocking high off the coast, keeps the northwest dry which may be more relevant than a three day cold spell. This breakdown of the recent wet weather pattern could be the precursor to dry El Nino; who knows, whether it holds remains to be seen.
The river forecast center has not reacted to the cold, it’s 10 day remains relatively unchanged:
I expect BPA to crank on its hydro plants to meet the increase in loads and I expect the RFC to jack it’s forecasts for next week to reflect that reality, and they have the reservoir bullets now to meet several of these mini cold events.
Coulee is now at a four year high for this time of the year, a major reversal from where it has been the last four months, and speaks volumes towards the volumes of precip which has been realized over the last few weeks. Seems most of that precip had a northern bent as the Canadian Columbia water supply forecast is now well above normal while most of the US basins are either normal or below:
That’s the thing about water supply, you never know where it will end, you only know where it is today, and today is healthy. Next week’s cold snap will be a good barometer of how Mid-C will behave this winter as the loads should approach a typical winter peak:
That is about 2-3000 MW of new demand over climatology which drove a $5.00 rally in our forecast. I’d expect day aheads to trade even higher than that premium as no utility wants to find itself holding the bag on Thanksgiving, but let’s see if the cold holds, or even enhances and extends itself. There could be even more room for a longer and higher rally if weather stays dry/cold.
Though the DC is in maintenance until Dec 21 there is energy flowing on it, at least per BPA:
Not sure what to make of that, perhaps it’s just test energy, but if its ramping back put another car on the Mid-C bull train. There is another train on the same track, however, and its heading in the opposite direction, at least in the south, and is led by the return of the Diablo unit and now the near full return of PV 2:
Call this about 2300 aMW (by the weekend) displacing gas units. Renewables aren’t helping the cause, especially in light load, mostly at the Mid-C:
So what’s it all mean? Who knows, everyone cares, but as I was once a betting man I’d say its bullish north, bearish south, and as Scott already suggested … cover your Dec Mid-C shorts, maybe go long – no, not maybe, go long. On top of that I’d sell my SP-MC Dec and Q1 length (I don’t have any and nor should you).
Happy Trading!
Mike