Post-Freeze Recap

Good Morning,

The lights are still on, and prices over the weekend, for the most part, didn’t do a lot. The “B-Team” managed well, it never got that cold in the load centers, though the hinterlands were chilly:

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If only you could get five million people to move to Montana, then the weekend would have been interesting. But you can’t,  and the weekend wasn’t that interesting:

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Cash was bullish, up $4.00 over last week, but not as much as the BOMs that bought the fact, now they have to sell the reality:

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The rest of us will pick over the bones and look for something to chew on, maybe those BOM 29s look tasty? Read on to see if we bite….


Demand

Starting with loads, how much did they rally versus last week?

001-loads-rm 001-loads-gb 001-loads-pv 001-loads-sp 001-loads-np 001-loads-mc

Every hub is up, and not insignificantly, 6700 MW in total, so why were prices so unresponsive. Call it a healthy system, one that was brimming full of potential energy. More on that in the Hydro section, let’s see if there are more BOM fireworks in store.

Hub Temperature Forecasts:

001-tempfc-hubs

The Mid-C leads the retreat into bearish territory by adding six degrees over last week’s outlook; everywhere else is just modestly different.

Mid-C Composite Temp Forecast

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The hub is looking at above normal temperatures this week and a fair amount of precip over the same days. Call that bearish.

Sacramento, CA

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Northern California remains below normal for most of the month and is drying out, call that bullish.

Burbank, CA

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Above normal in LA, hints of cool weather at the end of the month, but too far out to bank on, plus that week is the dead zone for loads; everyone is home watching the Seahawks win another Super Bowl.

Phoenix, AZ

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Phoenix is the only city that gets some art; they get a big red box because of the perfect weather they’ll have this week. Get out the clubs and enjoy yourselves, Arizonans and visiting tourists.

In closing the demand recap, let’s take a look at month-to-date degree days:

001-deg-day-bom

Impressive in the north, depressive in the south. With temperatures warming everywhere those positive anomalies will slip towards negative territory and those negatives will get more negative. In other words, BOM’s past is as good as BOM will get, weather-wise.


Generation

The ISO had a few more outages to report over the weekend:

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Most of those new outages were in NP; SP was sideways.

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Only one gas unit, Etiwanda 3, returned versus Friday, and there were several new units that came off …

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Most notably, Metcalf and Desert Star, both big and efficient; now if the gencos would only take off another 10,000 MWs we could get excited. If you like wind, you probably will get excited about Mid-Cs renewable outlook:

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This  is ugly, relative to last week, as the low pressure brings wind and rain, which is a good lead into our hydro update….


Hydro

Last week was dry and demand soared, and the reservoirs were drafted, which is why prices didn’t soar with the soaring demand:

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In a week the Northwest (including BC) lost nearly 1000 KAF of storage, not an immaterial amount and one that brightens the Q1-3 outlook for the hub, but doesn’t help BOM since that water is still working its way downstream, all the while the rains are coming and natural river flows will rise.

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Mid-C is looking at about 50% more precip than normal, most will come down as snow – good for the resorts, bad for length. Look at SP with its one inch, twice what NP is getting … not something you see every day. And the poor Rockies barely get a trace, not good for your Vail stock.

To draw a strong sentiment with precip, we need to look at where it falls….

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And it falls where it counts, the upper Columbia; both Spokane and Kalispel are staring at an inch of precip over the next ten days, both well above normal which will drive water supply up not an insignificant amount, which will render the Q1-3 a shade more bearish, fundamentally.

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Only the Great Basin is above normal, as of this morning, but we think the Mid-C is heading that direction. Contrast today’s 89% of normal with where we were the last two years – above and growing. Not to slight the other hubs, but when it comes to hydro there is only one, Mid-C, that matters, so let’s explore those water supply anomalies a bit further….

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The Snake has been all over the RFC map but today their forecast is in line with ours, both are at 96% of normal (Jan-Jul). We doubt we see those anomalies go up given that Boise will realize below normal precip, but the forecast won’t crater, either.

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The Lower Columbia shows some disagreement between the RFC and Ansergy, not a lot, but some. The RFC pegs it at 98%; we say 100%. Both of us will be growing that number by next Monday, perhaps to 102%.

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Interesting that the RFC is over at Coulee, the delta is 5%, RFC over. The standard deviation delta is even wider; the RFC has been all over the proverbial map on this one while Ansergy has remained calm and focused and nailed it. This forecast is going up, perhaps big time, with the positive precip anomalies heading into the Upper Columbia.

While on the topic of the RFC, today is STP Monday and we just have to look at their 10 Day to get a sense of what this afternoon will bring:

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Not sure what this afternoon will bring, but that Ten Day is going to bring a boat-load of energy to Bal Week … call that UGLY. It also suggests that today’s forecast is going up; we think it might go up across the 120 days given the precip outlook, though there could be some regulation changes off of last week’s big drafts. Don’t really know, don’t really care, either, since the STP will change many times between now and when delivery takes place.

California rivers are still raging following their big water last week:

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Contrast today’s flows with 30 days ago; big changes and those flows are generating more energy, case in point is the Pit River, up almost 50% and still not at hydraulic capacity. Call it bearish.

Before moving to transmission, we want to look at BON and GCL in more detail:

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Kind of a boring chart, right? But think about what happened last week – many utes set new load highs or got close, but the discharge barely changed. It is what isn’t in the chart, spikes in flows, that we think is most telling. BPA basically yawned its way through the weekend cold.

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Coulee had to draft, but BPA never had to take the project to even close to hydraulic capacity, 25% of its turbines never got wet over the weekend.  Now you, and I, know why prices sucked. More hints of that in the tranny section …


Tranny Section

Some day we’ll have to just post pictures of real tranny’s, but not today, we need to talk about some changes in how energy flowed over the weekend.

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Flows out of ZP didn’t flow, barely any energy moved, yesterday’s average was 2300 MW lower than the period average. Can’t explain it, other than loads and outages in ZP were up, or maybe NP didn’t want the energy because the MidC was jamming an additional 700 MW into the hub:

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This rally in exports caught us by surprise; we’d think that with near-record cold the hub would husband its scarce resources rather than export them, and the prices weren’t that high. Just goes to show how robust the supply side was at Mid-C.

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Flows into SP on the DC were up 650 aMW versus the weekly average, again falling on Mid-C’s coldest day of the week. Go figure…

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Some of that energy came from Canada; Powerex exported 400 aMW more than its weekly average.


Conclusions

  • BOM – this will be the last week for trading, it is just running out of hours.
    • Mid-C
      • 001-tr-bom-mc
      • Ugly chart, but now the market is below the forecast render us less bearish, though the fundamentals are ugly, we just don’t see any big moves either way and will buy back our short position and be … FLAT
    • NP
      • 001-tr-bom-np
      • The sell-off continued on Friday but the deltas are now back to the 60-day average, and we’ll keep our length on off of a cool northern Cal forecast and a drying trend.
  • Q1
    • Mid-C
      • 001-tr-q1-mc
      • The deltas have reversed, now the forecast is over, we were short, now we’ll buy back the short, despite a more bearish water supply outlook, we don’t think you can ignore the loss of one MAF over the last week … LONG
    • Q2
      • Mid-C
        • 001-tr-q2-mc
        • Will keep the short position on given the expected bump in water supply, effectively going long the Q1-2 roll…. SHORT