No Hibernating Bears Here

Good Morning,

As California exits its big heat event the market looks a touch top heavy, at least in California, maybe everywhere.  Perhaps the most interesting event yesterday were California temperatures:

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Burbank hits 100.9, not too shocking, but check out San Diego coming in at a solid second place and sporting triple digits – this is the city with the mildest weather in the world and it was hotter than …  Palm Springs, Sacramento, Las Vegas, and Phoenix.  For that matter, San Jose was hotter than Sacramento (and Las Vegas and Phoenix).  Santa Ana, anyone?

Markets

EIM – Yesterday

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This plot compares the EIM by tick for yesterday vs Monday, clearly the party is slowing down inside that market (compare black to blue lines), let’s see how today is faring so far (just 5 hours into it):

EIM Today

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Weaker, but its early, but won’t matter because all day will be lower than yesterday given the cooling trend has begun.

EIM – Inside the ISO

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Big prices but no surprise given big heat; now contrast what happened inside the ISO (SP, ZP, & NP) with Pac and NEVP’s experience yesterday:

Outside the ISO

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It is truly a Tale of Two Markets, though it is supposed to be the same market.

Net ISO Imbalance Energy by Tick (MW):

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Of course the ISO was short during the peak yesterday but if Pac thought it was going to get any of that triple digit love from its long coal it needs to think again … instead of RECEIVING $$ it PAID $$ for that honorable right to serve California’s loads.  And yes, they were selling:

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It’s clearly a dysfunctional market that serves only one purpose – protecting California’s ratepayers.

Day Ahead LMPs

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No surprise, again, today’s Day Ahead LMPs are up $8.00 week on week, the surprise is why they aren’t up $80 given lingering heat; another surprise will be how inelastic they are next week when loads follow temperatures and fall off the cliff.

Spot Gas

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Down everywhere but more at SCG, and SCG will continue to fall relative to PG&E as Burbank temperatures plunge into the low 70s, which is a good lead into some hub level analysis.


SP15

Total Actual Loads (Includes LDWP & IID)

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Up week on week, no surprise, but loads fell 2000 MW from Monday’s peak and there is a lot more room to continue falling:

Temperature Forecast – Burbank

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Kiss the 90s goodbye by the weekend and welcome in the low 70s for next week and note the huge haircuts in yesterday’s forecast versus today’s for next week.  Tuesday (Oct 4) is 8 degrees cooler, so is most of next week.  With that cooler weather will come extra wind energy:

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But October also brings us to the start of the fall planned outages, though we aren’t seeing any signs of that happening this week:

Major Units – Currently Offline

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Moss Landing (510 MWs) is new but that is in NP and won’t help SP, but over the next 3-4 weeks the outages will double:

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Meanwhile the hub’s outages are going backwards with 600 MWs of Encina units back online:

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Next Week’s Hourly Price Forecast

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Down, but after all of the above, are you surprised?

 


Palo Verde

Loads (APS, Tuscon, SRP, WAPA LC)

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Down, week on week, and check out the deltas to last year; it’s truly a brave new cold world in the deserts in 2016.

Phoenix AZ

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Yesterday’s forecast gave PV a much-needed shot of adrenalin with a return to above normal temperatures; today’s just handed the hub a fistful of ludes as it dropped next week’s temperatures around 9 degrees.  But there is a rally 10 days out, on Oct 9, right?  Yeah, and there are two great candidates running for President, too.

At least PV, like SP, has a whole lot of outages to look forward too, it will need them to sustain any hope of a price rally, though our forecast suggests the hub has hit a floor and poses little downside from current levels:

Hourly Price Forecast

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A hub with a strong floor is not a bad place to place length as that floor can act like a long put (free one at that) but the problem with PV is without temperatures in the high 90s its price is not moving.



Mid-Columbia

Loads (13 BAs)

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Surprisingly not weak, up 600 MW week on week, off of some AC load driven by unseasonable warm, and nice, weather.  That too shall pass …

Portland, OR

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Dropping like a rock and note next Tuesday’s massive 14 degree drop off of yesterday’s forecast.   Sliver liners would counter that cold means heating load, but they’d be wrong, at least in early October:

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Sorry, the glass remains half-empty, the clouds only have murky grey linings, even min temps are bearishly above normal.   At least precip is weak, the 10 day Mid-C compisite is below normal but that doesn’t help your Oct (soon to be bom) length.  Nothing in the near-term horizon helps, especially when some of the reservoirs are starting to draft:

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The Pend Oreille is enjoying an additional 5kcfs off of the Lake Pend Oreille draft and Coulee has reached its refill target of 1283′, none of this bodes well for MidC, as our price forecast illustrates quite succinctly:

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Most of that decay is driven by the loss of the DC exports but wind energy is winding up, too:

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And one final factoid to seal Mid-C’s fate …. reservoir levels are reasonably robust for this time of year, ahead of both the last two years:

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700 KAF over last year and 2400 over 2011, though not materially different than normal, definitely not bullish.  One bull bone we can toss the ravenous long dogs  is …. SPILL

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Check out Priest … it dumped 9k yesterday … okay, not much of a bone, let’s call it a splinter with no meat or gristle on it, but take what you can get.


Conclusions

  • October
    • SP15 – short off of weak fundamentals and coming out of the heat wave
    • Palo – long off of a need to be long somewhere plus the hub already has weak loads and should enjoy lots of outages … that nuke is going down sometime, we think soon
    • MidC – short because we can find anything to be bullish about, not even that 9k spill at PRD gets us excited.  Plus the simple fact that no rain means there is only one way that can change … lots of rain, and when that comes then we’ll be convicted short.