Good Morning,
Mid’c is currently projected to realize 1.8″ of rain over the next ten days – that definitely caught our eye this morning:
It is early and the ground is dry so this doesn’t do much, westside hydro energy will rally 500-1000 aMW for a few days. The more salient point is this launches WY17 off to a wet start. Most of the rain falls next week but the storm is not limited to the west side of the Cascades, this bad boy soaks Spokane:
and Kalispell MT
And …lots of ands …. all of this precip will come down as snow north of 3000 feet…. comes down as snow in Kalispell and probably in Spokane. Of course caution must be the rule of the day, these numbers are posted in days 6-10 but they have held in the forecast for the last few days. So if you loved hating MidC BOM because of the DC cuts you gotta really love hating it now. One final point on this potential wet event … the RFC may start folding in some of this into their 10 and 120 day forecasts which can mean only one revision direction …. UP.
Markets
Yesterday’s imbalance market showed surprising strength during hours 19-20 and also posted a few negative prices which wasn’t surprising given the weak loads (see below). Today should be a repeat of yesterday.
Prices by Location – Inside the ISO
Prices by Location – Outside the ISO
The weakness at SP is reflected in the string of negative prices realized by Nevada Power and Pac East, not that Pac West faired a lot better but at least was positive most of the day.
Down $8.00, no surprise, but look at the south-bound congestion across the solar hours.
Loads
Down, down, down, and down .,..no surprise, but it’s the 13,500 down in Kally that is a surprise, a negative surprise. Massive load haircuts, but that to shall pass.
Temperature Outlook
We already talked about the precip but its worth pointing out the ten degree drops in lows will put the hub back to normal which will trigger the first substantial heating degree days.
Strong temperature forecast for the weekend and it’s building but the operative word here is “weekend”. Still it speaks to the warm trend California finds itself in.
Like San Jose, Burbank also gets toasty … but the heat falls over the Friday-Monday period. Loads will rally and coupled with more outages (see below) and the DC cuts maybe there is a case to be made for SP length?
Though Phoenix doesn’t get as hot as LA it does rally and stays above normal for most of October. Should that hold it could make Palo as interesting from the long side as SP, key will be keeping Phoenix temps north of 90. We also noted that PV3 is at 97% today, perhaps readying for a weekend refueling?
Hydro Update
Aside from the potential big rains (and snow!) coming to the northwest there isn’t a lot of hydro news.
The River Forecast Center has been fairly steady in its ten day though it seems to have blown off the STP numbers. Should the MidC get that rain we would expect RFC volatility to return, we hope so.
Week on week cuts at Coulee caught our eye, all of that (and more) can be explained by the big cuts in outflows out of Arrow:
Note the day the cuts began – Oct 1 – the day the DC died. Coulee didn’t take the full haircut as an increase in flows on the Pend Oreille have absorbed about 40% of the drop. Just speaks to the giant shell game BPA can play with fundamentals. Cut a line, park some water, draft some reservoir … wouldn’t that system be fun in the hands of a speculator? I guess not that much fun, we’d be in jail within a year.
Generation Update
Lots of new outages inside the ISO and worthy of closer inspection:
Whoa! Outages up 50% over last week, 3000 MW of new outages, wow, right? Not so fast, let’s see what is off line:
Oh, 1000 MW hydro, but that is bullish, right? Not really, when the system plant factor (hydro) is probably around 15% taking off 10% of the capacity is moot. We don’t see this helping anyone’s long bom. What will help are the new gas units off-line, and they are substantial: 
and mostly at SP15. Call it bullish and call it the start of the outage season inside California. Call the outlook for ISO wind energy bullish, too:
While the northwest will just be normal which is somewhat surprising as storms typically are “blown” in so perhaps the wind side of the forecast doesn’t reflect a storm, yet; if so expect more wind energy at Mid-C.
Tranny Update
No, not that “tranny”, the one that flows electrons. So we know the DC is down, let’s see how the rest of the WECC responded:
Almost 100% of the lost export capacity has been absorbed by incremental exports to BC and NP15.
The Canadians have absorbed almost all of the stranded DC energy but they may not be buying because prices are cheap – those cuts out of Arrow are material and perhaps they actually need the energy?
We also saw some changes in flows elsewhere though it may be hard to say all of these are the result of the DC.
The irony here is that energy is flowing out of California but all of that is LDWP selling to Nevada Power.
Great Basin exports to Palo have fallen while Palo exports to SP remain about the same.
Net imports to the ISO have tanked but mostly its because of the DC.
Conclusions
- BOM
- MidC
- There is plenty of reasons to not like length in BOM Mid-C (DC cut, rain coming, decent wind) but there is one compelling reason to get long – the low prices. We really can’t find a reason to short this at these low prices so we are …………FLAT
- Palo
- What’s not to like? Cheap prices, a nuke is coming down, fall outages are in play and weather is turning warmer … we are LONG
- SP15 – if the heat would have fallen during the week we might have liked it but it falls on the weekend. That said, we like all the outages….LONG