Good Morning,
The cold weather is building but still doesn’t make it to the west-side load centers and our outlook remains bullish across most of the WECC, but not crazy bullish and not the stuff of future legends, just a good old fashioned cold front.
Our composite weather forecast for the Mid-C (five stations weighted on mapped-load) shows a confirmed cold event occurring on Dec 3 and lasting nearly ten days. The event, as compared to last week, has been deferred several days, now the early part of Dec is ten degrees warmer than what was forecasted last week.
The cold is not limited to the northwest; California “enjoys” it as well:
Sacramento’s low is as cold as Portland’s; but, alas, the very cold falls over the weekend, though early next week (Mon-Tues) will still be chilly, and cold fronts can linger, and can build. All eyes will be watching to see how this plays out.
Even the never cold Burbank is frosty:
And its coldest days fall on the weekend, too. These new degree days may put both halves of the state back to normal with respect to gas demand, they are both well below, currently:
Socal Gas Total System Demand
Collectively, the state is off nearly one BCF, year on year, but most of that shortfall will be made up next week, which should firm up the spot gas market; lately that market has been quite weak in socal:
The Rockies are rocking off of the very cold temperatures while Socal finds itself lagging in loads and its relative basis to the northern hubs is tightening. Stanfield was up $0.07/mmbtu, week on week, while Socal Citygate was off $0.10, a not immaterial $0.17 swing in price. That momentum may reverse if the state recovers that 1 B of load.
Speaking of loads, the power side of the equation is up pretty much everywhere, week on week:
The Rockies are leading the way, both in terms of relative change (up 1000 MW on the peak hour) and especially so in terms of % change. Surprisingly, NP loads are also up 1000 MW, while the Mid-C lags both with just a 700 MW bump. That hub, Mid-C, has seen its temperature forecasts raised, not lowered, in the very front as the cold just can’t find a way to leak over the Cascades. Good for golf, bad for that expired bom length.
We noted all the nukes are running, as they should be, and that flurry of new outages reported in the ISO has somewhat abated, a few critical plants have returned:
Another 1100 MW of low heat rate capacity ready to quash any cold-driven price spikes. There were, however, a few new units off line:
Most notably, Palomar is enjoying a 374 MW derate and Walnut Creek is completely off-line. Don’t worry about any of that hydro, it can be online or offline and won’t change the energy outlook ….not enough water flowing in the Golden State’s rivers.
Speaking of water, let’s explore some hydro updates. At this early stage of the water year we really care about two things: Reservoirs and Snow.
BC Hydro is sitting on a five-year high, so is the Mid-C, all from those epic Oct-Nov rains. That is bearish, collectively there is nearly a full MAF more in storage than the previous four-year average. Offsetting that unsettling reality is the dearth of snow, despite those epic rains (it was epically warm, if you recall):
We are pegging the northwest (Mid-C) at a dismal 55% of normal (ten year); that is bullish and will go a long way to off-setting the extra water in the reservoirs. This approaching cold weather will also drive those reservoir levels down as both BPA and BCH generate to serve loads, but those snow anomalies will drop further as the ten day outlook is relatively dry:
Spokane is the exception, that inch (over ten days) comes as a surprise, especially when compared to Portland, which typcially realizes 3X more than the Lilac City, instead it is projected to receive but 50% more. Note the dearth of moisture at Boise and Kalispel, just small traces, mostly because it is too cold. BTW, Spokane is cold, too, and if it really does get an inch of precip there will be some epic ski days at Schweitzer.
We can’t do hydro without commenting on the RFC, let’s start with the 10 Day:
On the surface, and beneath, this is a bearish forecast; nearly every day has more energy. But we think most of that is driven by the cold weather and the ute’s drafting to meet loads which is merely energy shaping out of Q1 and 2 and into Dec; plus those bumps in energy are about half of what we expect to see from cold-driven demand.
The government is backing down their water supply outlook, duh:
TDA is now at 96% of normal, very close to our own number, but they still have their silly 112% of normal at Libby … unless they installed chillers and snow making machines in the Bitterroot we don’t think that is a valid number, after all, the snow anomaly there is a scant 66% of normal (the Bitterroot is just 35% of normal). All we can say is “whatever”; Libby’s outlook is not 112% of normal, it is below normal.
Conclusions
- Dec (the new bom)
- Mid-C
- We were long on Monday and see no reason to change that sentiment, but we won’t add to that length because we are going to get longer elsewhere in the hub.
- NP
- Keeping the length through the weekend off of the cold and a possibly strengthening gas market
- SP
- Short, the hub will see loads pop up, but nothing like the rest of the WECC, and its HA prices have been abysmal of late:
- Palo – not interested at this time…flat
- Mid-C
- Q1 & Q2
- MidC – we are going to buy off of a relatively dry outlook and a probable drafting of some of that reservoir surplus. Trading the water year is a game of patience, there is a cumulative creep, and we are seeing the outlook growing a shade more bullish … long a piece of each.