Good Morning,
Weather turns much cooler and hints of big precip for the northwest, with emphasis on the word “hints”. The weekend looks very weak and next week not much stronger except for a rapid fall-off in renewables.
Markets
The ISO found itself getting longer in the imbalance market versus earlier this week, no surprise, loads have fallen hard inside CA.
Yesterday saw a nice five tick rally during hour 16 but it was only realized inside the ISO:
Actually, it was only realized at SP15, ZP and NP didn’t budge, endemic of how weak things have gotten north of SP.
Note the same ticks for the outside hubs – Pac West got out the checkbook and paid again on those hours. Warren – are you reading this?
Today is starting out much like yesterday except we’d expect prices to come in much lower; that is what the DA LMP market is seeing:
DA peak is off $2.00, week on week, but off $35.00 from the highs earlier. So is nat gas:
The biggest week on week haircuts in the spot market weren’t at SP, they were at Stanfield, like the MidC needs more bearish pain, though the spot gas market is inversely correlated to that bearish fundamental pain so I guess it makes sense. There are hints of hydro good news (for length) and feinter hints of extreme bearishness at MidC.
Hydro Outlook
Mostly today’s hydro outlook is about Mid-C but then it usually is. We mentioned something is afoot in Portland, specifically at the RFC:
Something like “Big Cuts” in their ten day, big as in relative to Monday’s STP, and bodes bullish for next Monday’s forecast. Pretty much every day in the ten day is materially (700-800 aMW) lower than what the RFC’s ouija board prognicstacted earlier this week. Funny they get bullish just when there are hints of more water coming:
Portland Temps & Precip
These two plots are both bearish; temperatures in Portland are expected to be 5-10 degrees below normal and whatever AC load has been running will be gone. But what is more interesting is the massive precip that has been in the 15-20 day forecast …three days running. We put a very low probability on any of that actually hitting the ground but we’d be remiss not pointing this out. What is striking/telling is 1) Duration – like a week of heavy rain every day; 2) Consistency – the last 3 forecasts have boldly said the same thing, and for the record, this isn’t climo its a very large anomaly.
These RFC cuts are running counter to what has been happening over the last week …most northwest stations are up; check out the Pend Oreille, up 9000 CFS over last week. All of this new-found water is coming from the reservoirs, most have been modestly drafted to provide the GCL refill:
With Coulee now having met its target of 1283′ these other reservoirs most likely will just pass inflows which may explain the RFC’s new found love for MidC.
Generation Outlook
Not much to say with respect to the Gen Class aside from not much has changed. Nukes are all at 100% and Cal ISO Outages are abysmally low. Renewables, on the other hand, are poised to crush the weekend markets and support next week’s on peak:
The Mid-C renewables are more dramatic: weekend vs week day, but all three points show the same phenomena …. massive weekend wind and weak week day wind.
Demand Outlook
Loads are coming off, will keep coming off, from earlier this week, though Palo actually had a small rally:
NP is up week on week but down 2400 MW from Monday’s high. The weather outlook supports further decay:
Where San Jose was 20 degrees above normal earlier this week Sunday is 10 degrees below normal, though the rest of next week will just be normal which means no ambient air-driven loads. A weak north won’t help the south.
First the good news, loads have remained remarkably strong at SP throughout the week; yesterday was 8200 MWs over last week. Now for the bad news, loads are coming off, they are already off 2100 from earlier this week and Mr. Weather says there is more downside yet to be realized:
Like San Jose, Burbank sported huge positive degree day anomalies this week but over the weekend those will go negative then bounce around normal for the foreseeable future. Toss in some strong winds and you got a fine recipe for a really weak weekend. Glad we’re short the new BOM. One silver lining in this dismal load outlook is it may trigger some new planned maintenance given market weakness.
Palo is a slightly different story:
Up week on week like everywhere else but also up from earlier this week as temperatures returned to the mid 90s and almost hit triple digits yesterday.
But don’t start lifting offers just yet, those 90s are quickly displaced with 80s for all of next week; all that means is loads are going to look like they’ve been of late which, like SP, should trigger the start of maintenance season.
Note Mid-C’s loads are flat year on year which should come as no surprise given that the hub is stuck in one of its two “no load” seasons: spring and fall.
Those weak days are soon to end, loads with just normal temperatures are poised to rally 1000-2000 MW over the next three weeks; you just need to find a way to carry your over-priced length through those three weeks …good luck.
At least Powerex is doing its part to support Mid-C prices:
The days of hard selling are morphing into weak buying and we’d guess that weak buying might become strong buying when the DC goes down tomorrow for its thirty day maintenance.
Conclusions
- BOM
- SP15
- We’d love to tell you it’s cheap, we’d love to say “long aint wrong” but we’d be lying on both accounts; until we see some more 90s and new outages we are ……………..SHORT
- Palo
- We love to tell you its cheap, we love to say “long aint wrong” and we be not lying on both accounts; plus we like the outages that are coming ………………LONG
- Mid-C
- We’d might tell you it’s cheap, we may even say “long aint wrong” and we just might be long but then again, we might just be short. LOL. We’d like to be long because we like seeing those RFC 10 day haircuts, we like seeing Powerex Buying, but we hate losing the DC and this weekend’s wind blows away any lingering long sentiments and so we are ……………SHORT
- Rest of Q4 – go to the website and guess our sentiments, we’ll let you know on Monday if you were right.
- SP15