Good Morning,
A new day, a new month, and a new water year. We can be certain of two thing as we begin this new water year:
- – no one knows how it will play out
- – it will make or break most trader/hedger’s year
Reservoir levels are always a good place to start when seeking bias at the beginning of a new water year:
This water year begins on a slightly bearish tone versus last year, though it is more normal than not, just last year was bullish at the same time. MidC is 4% fuller (than last year), Cal is a whopping 20%, while BC is 10%.
Another useful (somewhat) indicator can be statistics – are we in wet or dry trends?
The above table summarizes the NWRFC’s April 15 water supply forecast for the April-Sep period over the last six years. Perhaps too short of a time horizon to draw strong conclusions, but the trend of late is above normal water, especially where it really counts – at Coulee.
All of this is just to say our bias, going into WY17, is slightly bearish given both current reservoir levels and the six year trend. I am sure that bias will change a dozen times before we reach April 15, 2017. For now, let’s just plan on expecting surprises. The following chart demonstrates where heat rates would clear for Mid-C given the last 25 water years:
All over the map, just like where WY17 may travel as it unfolds.
Weather
Back to things we know something about, like weather. Hints of heat in the ISO and deserts while hints of wet and cooler in the northwest.
Our Mid-C focus throughout winter and spring will be on composite temperature and precip forecasts versus individual stations, likewise, minimum temperatures will be mostly reported. As a refresher, the MidC composites are made up of the following stations and weights:
Precipitation Stations & Weights
Load Stations & Weights
Mid-C minimum temperatures remain well-above normal though there are hints of the season’s first cold (albeit slightly) next week. The 10 day precip outlook is above normal as it is for most WECC hubs:
Still focused on Max Temps everywhere else, and NP15 looks to be heading into another warm event though not as warm as last week but warm enough to trigger a substantial load rally off the current cool temperatures for this week.
No triple digits in LA but a rally from the mid 70s to low 90s will trigger another 2000-3000 MW of peak load.
Sun City’s temperatures are reallying too but then they had nowhere else to go but up. Currrent outlook is ten degrees below normal but next week looks like Phoenix might realize a few positive degree day anomalies though the trend of late has been head-fake heat in the 6-10 day replaced with cold reality in the 1-5.
Loads
Down times four, nothing else to be said about Sunday’s loads.
Hydro
The news here is the volatility in the NWRFC’s 10 day:
Big cuts this week offset by rallies next week all of which smells like some big regulation changes from BPA. Today’s STP shouldn’t change much apart from fixing a few odd anomalies in last week’s; there should be no fundamental changes because nothing has changed fundamentally and nothing will change fundamentally until it either rains a lot or doesn’t rain at all.
Generation
All the nukes are running but PV3 has to come down soon to get recharged. We are seeing some changes inside the ISO:
Lots of new gas units offline though these outages are offset by a few that returned over the last couple of days:
Most of what returned was in SP leaving NP net more bullish from the gen-side than it was last week. Perhaps with the rally in load next week we might see some decent price action.
Transmission
The “news” in this group is the DC maintenance:
Back to zero and will stay at zero most, if not all, of this month. One would think the AC would be full given that its sister line is down and out:
One would be wrong, in fact flows reached a 7 day low yesterday (hour 16) which only speaks to the weekend weakness endemic across the WECC. Powerex saw that and was buying:
Not strong buying but definitely not selling. This chart is interesting because it adds insight into the relative depth of the weakness, or strength, of the Mid-C market. If Powerex likes buying you’d think they’d fill the line, they definitely have room in their reservoirs, but they only bought 500. Most likely explanation is the offers start pulling back if they persist in their bids which speaks to the underlying strength of the real-time market.
Another line that was intersting yesterday was Path 15/26:
The last time we saw Path 26 flow that much energy into SP it was 110 degrees in Burbank but on that hour (Saturday, HE 19) the temperature was closer to 90. Most likely something tripped and the hub looked to ZP to balance.
Conclusions
- BOM
- SP15
- Long off of the DC cuts, a weak market price, and next week’s heat
- Palo
- Short off of that $2.00 rally in BOM … call it taking profits
- NP15
- Long off of next week’s heat. The market rallied up on Friday but we’ll join the trend.
- Mid-C
- Short – loads aren’t moving and its getting a touch warmer but don’t expect to make much off of a short here, just hedge out the ISO length
- SP15
- Nov
