Good Morning,
The long holiday is over, the lights are still on, all is calm, all is good. The markets aren’t so good, though, the ISO’s HA market struggled to match the exuberance of the DA market all that long weekend:
Gas slipped a touch on Friday but still remains well above a week ago:
The outlook, at least from our chair, is near-term bullish (from the season’s first real cool weather) and less so the further out we look in the curve (from growing snow).
Demand
All hubs saw load increases, week on week, which is a precursor of what is yet to come:
You can argue the PV and SP bumps are driven by bouncing off the bottom and you’d be right, their A/C loads are over, now it is just heating degree days that can drive a rise. The Mid-C saw the biggest jump, 1400 MW, but NP’s is proportionately the same. Also note the large deltas at Mid-C versus last year, nearly 5000 MW lower, but last year, at this time, was in the throes of some very cold weather, all of which gives you an idea of what could happen if the forecasts grow colder.
Looking forward there is definite colder weather coming:
Mid-C Composite Temperatures – Minimums
So, is it going to get real cold? On the east side of the hub, yes, on the west, not so much. The composite has set a new low for this year, it now flirts with the mid-20s; we were excited to see it sport a low 30 handle last week, so definitely cooler. But as previouisly mentioned, this event doesn’t chill the I-5 corridor:
Portland, OR
At best, it’s a mean-reversion event meaning temperatures revert back to the ten-year average. So, if Seattle and Portland are not cold, but the composite is, that can only mean the eastside is well below normal.
And so it is; Spokane finds itself facing single digits on the 9th, and experiences nearly two weeks of below normal. Boise and western Montana see similar cold, all of which approach “design day” minimums; if only that cold would leak over the hills into the load centers, then we could get excited.
Northern California is cold, too, not bone-numbing burn the furniture cold, but well below normal for the next ten days.
Socal, however, avoids the cool weather and is above normal almost every day in the 21 day outlook. That is just bearish.
This week will be a good test for heating degree day loads as the hub is several degrees below normal (minimums); but we doubt we see much of a bump, or if we do it will be short-lived:
Our load model is showing a peak demand rally of 1k on the 30th which is not a lot when compared to summer loads that approach 20,000 MW peaks. There is plenty of idle capacity to cover that.
Generation
Not a lot of Gen news, the ISO is still sitting at 5K total outages, down from 12k a week ago, and no major units have returned or come offline. All of the nukes are running, as they should be. Perhaps it is news how much wind energy was generated yesterday?
All three had big days and the Mid-C looks forward to more big days this week.
Hydro
Snow anomalies have risen, dramatically in some places, in both the northwest and California, yet remain below normal in many places, especially those places that matter in the northwest.
This table was sorted on Cumulative Downstream MW which puts the most important basins on the top, and they are all below normal, but all have rallied hard off the levels we were seeing two weeks ago. Contrast WY17 (CUR) with WY16 and you can see that this year is still well behind last year, and last year ended up being a below normal water year.
All of that said, it only takes a good storm to turn this water year around, just look at gapping up from a 35% anomaly two weeks ago to a 65% today; or the Pend Oreille, mired in single digits two weeks ago, now boasting a 51% anomaly, though when compared to last year (99%) those boasts sound empty. Still, a big storm, or a set of big storms, will easily put the snow levels above normal, but we don’t see that big storm in the 10 day outlook:
Mid-C is above normal, barely, but only because the west-side gets douched with two inches of precip, just like it has been nearly every week since Oct. The east side doesn’t see a lot.
The two you should care about, Kalispel and Spokane, are set to receive less than a half inch over the next ten days. Also compare the west-side changes; both Portland and Seattle have dropped an inch in their outlook; Lake Tahoe is half of what it was last week.
The River Forecast Center is also backing off of its water supply numbers:
TDA is now below normal, 97% of normal, while Coulee still is above (WHY?). I guess because they weight the Kootenai so high, but where do they get a 114% anomaly on that river?
We have the current snow pack anomaly at 68% of normal, there is nothing positive about that number. Oh well, we don’t have the $5 million budget they do, so they must be right.
The 10 Day forecast has been jumpy of late:
Up/down/down/up – rendering out expecations for today’s STP mixed. We think those bumps on the back of the 10 day are more load-driven than natural flow-driven as BPA prepares to generate into the cold weather.
Transmission
We saw a slight derate on the AC for early Dec:
A 1000 MW cut for a couple of days, those days where it is the coldest. Flows on that line have been robust the last couple of days:
Interesting, while the AC is approaching capacity, the Canadians have backed off of their exports:
They even bought for a few hours yesterday. One would think if the AC is nearly full the Northern Intertie would be exporting, but one would be wrong, at least yesterday you’d be wrong.
Flows out of ZP remain north-bound, and have been since the demise of the cooling season:
Don’t expect that to change, NP needs the energy (relatively speaking) and SP doesn’t.
Conclusions
- BOM – it’s over, forget about it, that product has been relegated to the dailies, and only for a day or two.
- DEC
- MidC
- we liquidated our length going out on Wednesday, but we are going to put it back on in front of cooling and drying weather
- The market is trading at a slight premium to the forecast, that market has rallied hard of late, we think there is more room for it to run in front of a possible cold snap spilling westward into the load centers. We would not want to bet against that possibly happening, cold has a tendency to spill westwards if it holds, this event seems to have traction
- we liquidated our length going out on Wednesday, but we are going to put it back on in front of cooling and drying weather
- NP
- We’ll be long here, too, for the same reasons as we are long at Mid-C
- The premium is not crazy, it is probably correct, and we like owning something inside CA since that market can be so irrational.
- We’ll be long here, too, for the same reasons as we are long at Mid-C
- SP
- Not a lot to like down south, and we are long in the north, and so we shall be short here
- The premium (to forecast) is slightly richer but the fundamentals are not there to support any premium; the weather outlook in the hub is bearish, unlike NP and Mid-C
- Not a lot to like down south, and we are long in the north, and so we shall be short here
- Palo
- If we had a choice of owning PV over SP it would be PV, but we don’t really have a compelling reason to own PV (despite that 1k load rally later in the week. We choose to ignore PV …and are flat.
- MidC