Month: December 2016

Good Afternoon,

Here are a few highlights of what’s going on in the west today.

Natural Gas Markets

Nat Gas Summary

Mixed results with four of the six hubs up day-over-day. El Paso non-Bondad showed the largest nominal increase with $0.14, or 4%.

Demand

SP15 Loads

SP15 loads have peaked above 20,000 MW for three consecutive days.  Demand is up 545 week-over-week and down 236 MW year-over-year.

NP Loads

NP15 is up 998 MW year-over-year, increasing the the annual difference in load compared to the past several days.  Demand is up 819 MW week-over-week.

Mid-C Loads

Cold weather in Mid-C continues to drive up demand as yesterday’s loads peak at 5,220 MW higher than last year. Loads are also up 4,227 MW from last week.

Temperatures

Sacramento Temps

Sacramento is expected to be a bit warmer than forecasted yesterday as the minimum temperature could reach 14 degrees above normal tomorrow.  Temps will fall closer to normal soon after, but will hover above average for the next 10 days.

Spokane Weather

Spokane and the Inland Northwest continue to sit in the middle of below-normal minimum temperatures, but will see even more extreme temps next week as they approach 0.  Next week’s low are forecasted 9 degrees lower than they were yesterday for the 13th.

NW River Forecast

The 10-Day River Forecast remains heavily up from the STP forecast for each of the next ten days.  Avg MW should come off around 600 MW from yesterday to today and continue a slow decline through the weekend.

Gas Reports

Mid-C Nodal Power Summary (by Plant)

Mid-C as a whole dropped less than 6,000 MCF as a whole though a couple plants dropped out completely including Mint Farm and Goldendale Generating Station.  Those two plants were largely cancelled out by Hermiston Generating Plant increasing 23,000 MCF.

Hub-Level Gas Demand

Great Basin decreased close to 11% (101 MMCF), and NP15 decreased 15.7% (541 MMCF) as all hubs saw a drop in gas demand day-over-day.

Outages

Major Unit Outages

Just two new outages today — both in SP15, and both gas, for a total of 700 MW.

Renewables

SP15 Renewable Generation

Solar generation in SP15 has been down the past three days though it shows potential for a big day today with a forecast of over 6,000 MW.  Solar should quickly drop back down tomorrow and through the weekend.

Mid-C Renewable Generation

As expected, the Mid-C cold front left the area chilled but without wind.  Generation is expected to remain well below normal for the next few days before ramping back up mid next week.

Transmission

Transmission – MC-NP

TTC dropped to 3000 MW yesterday, the first decrease in over a week.  Flow had been slowly stepping down for the past three days even before the decrease in TTC occurred having reached a low of 1706 MW yesterday at 9:00 AM.

Transmission – MidC to BC

Flow has continued to decrease after briefly reaching above 0 MW on the 6th.  The MC-BC daily average settled at -1146 yesterday and looks to continue its trend down.

 

Have a great rest of your week,

William

Good Morning,

The WECC survived the mighty cold front, the Siberian Express of WY17 has passed and the lights are still on. Perhaps the only casualties will be the longs that didn’t sell the facts. All that is left to do, now, is to disect (vivisect) how the west managed the event, because the event is over; if you didn’t earn your Maserati on Mon-Tues be resigned to spending the rest of the year behind your 72′ Ford Pinto. There is nothing out there to get excited about, aside from a massive market puking.

On to the vivisection; let’s start with the ISO’s hourly  markets:

Ooops, SP rallied more than NP, what gives? NP didn’t even move, week on week, on an event that saw WECC loads rally 5000 MW:

Not fair, right? Loads up, prices flat, and why did SP rally more than NP? The HDDs were up north, not down south. Vivisection – cut into the beast and see which entrails fall out, let’s start with actual loads:

All hubs up, except for Palo (down 500 MW), but really the only hub that is materially different is the Mid-C. That is the cow that needs to be gutted, dissected, vivisected, for therein, within that hub’s healthy organs, lies the reason why NP didn’t budge.

First, let’s examine how cold it actually got:

Wow, 15 in Billings, they were probably golfing. I recall the sub-zero’s from my college days in Bozeman, 15 is a joke. Portland recorded a low of 30 while Seattle shivered through that fleeting hour where its mercury touched 32 ….. YAWWWNNNNNNNNNNN.

Still, it was cold enough to jack loads 3000 MW, that should have done something to prices, right? Yeah, if supply held constant then net demand goes up 3000 MW and the hub has to dip deep into the stack:

Oh so close, at least that is where the market is putting the hub’s bom. So close to a major bullish inflection point, but the forecast is well behind, lags the market by about 2000 MW. If the market is right the hub is poised to explode, or it should have exploded yesterday, it didn’t, because the hub is where the forecast crosses the stack, not where the market crossed the stack. The market was bullish because it was long, the forecast is neutral because it is right.

Still, this doesn’t complete our autopsy, we need to examine each organ (fundamental) to see which one malfunctioned yesterday (actually, which one didn’t malfunction). Let’s start with hydro, always a good place to begin when there is 30,000 MWs of the stuff, and Coulee, the mother of all plants, is where we shall begin:

Note the flat discharge across all on peak hours yesterday; earlier BPA needle peaked hours 17-19, but not yesterday, they ran the 128kcfs through the plant on every on peak hour. But the glass half-fullers would counter that they just liquidated bullets by BPA being so short-sighted as to generate into a cold event. Not really, storage (reservoir elevation) barely dropped. In fact, BPA built a little cushion for this event by drafting Arrow, like around two feet of cushion and they didn’t use it, they barely drafted the reservoir. That extra two feet is now hungrily staring at those BOM $30s, so are we.

Arrow isn’t done drafting, either:

Which means GCL will either continue to push 128kcfs through the penstocks or the reservoir will further rise; either way doesn’t bode well for BOM.

Thanks to the EIA (best federal agency ever created, btw, and it is too bad we can’t vote how our tax dollars are spent, I’d give them most of mine), we can look at each of the utes and see how they behaved yesterday:

This table suggests that new generation (compare current to week one) really didn’t change much, the hub was up but 500 aMW (mostly explained by Puget). So how did Mid_C serve that 3000 MW of new load? Gencos helped out, quite a bit:

The hub pulled almost double versus a week ago, Avista even fired up their peaker, but it probably cost them to do so. We still don’t think we’ve found all the reasons why yesterday was such a flop, it must be those tranny flows:

Yup, the AC and DC exported about 1k less each while BCH just sold the same – probably didn’t like the price that much. While on the tranny bandwagon, let’s look at how each of the utes played their transmission cards:

Pac had the biggest delta in the off-peak, swinging about 500 aMW versus last week. The rest of the utes pretty much ran their lines unchanged.

The hub, in the on peak, exported 1200 aMW less. Most utes either imported more energy or exported less.

Post-op has been completed and our conclusions are simple – it just wasn’t that cold. The northwest has ample resources to meet those levels of loads and all that is left to do is chase the bom down, because the weather outlook is turning bearish:

Mid-C Temperature (Composite)

Three circles, three observations.

1. There is confirmed evidence of more cold next week, perhaps not as cold as this week, but below normal
2. Beyond next week things get warm, at least how the outlook sits today.
3. Very dry pattern sets in next week …Q1-3, anyone?

Speaking of dry, let’s look at snow levels:

Most basins are slipping from earlier this week; with that dry next week the negative anomalies will only grow.

Other Stations

Anything north of red is bearish, all three cities are bearish, need we say more? On the generation side of things there isn’t a lot to report. All the nukes are running and there is a smattering of new outages

offset by a smattering of returned units.

Gas demand (core) is up, it should be it was cold, but not that much:

All hubs are up year on year, except for PV and SP, they are down, and will stay down given the bearish temperature outlooks, all of which suggests that the west gas basis outlook will weaken.

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Conclusions

• BOM
  • Mid-C
    • 
    • Short, we don’t like the fundamentals, headfake cold next week aside, and love the high prices……………SHORT
    • On that light load we carried into the “event”, we still don’t think it is a bad position given the market’s indifference and will keep it on, but we are net short mwh for the period
    • 
  • Other Hubs – short
• Jan
  • SP
    •  
    • The market has jacked the roll, we think length just rolling away from the Dec trainwreck, and its probably overdone, though for the trend is your friend fellows it might look like a nice play, we hate it ……………short the Jan
• Q1 & 2
  • Mid-C
    • We’ve been long this and will stay long off of the dry weather and some hints of more cold in bom, and we are short bom so like the hedge
  • SP

Good Afternoon,

Here are a few highlights of what’s going on in the west today.

Natural Gas Markets

Nat Gas Summary

All hubs are up day-over-day.  SoCal Citygate showed the largest nominal increase with $0.45, or 13%.

Demand

SP15 Loads

SP15 loads rallied yesterday to peak 76 MW higher than last week.  Year-over-year load totals continue to peak at nearly the same levels having a difference of just over 300 MW.

NP Loads

NP15 is up 586 MW year-over-year, bucking the trend of lower demand over the previous week.  Demand is up 398 MW week-over-week.

Mid-C Loads

Year-over-year loads have swapped positions as Mid-C begins to cool off considerably.  2016 demand is up nearly 3000 MW over last year, and up 2756 MW over last week.

Temperatures

Burbank Temps

Burbank continues to forecast above-normal minimum temperatures, though slightly lower than what was predicted yesterday.  The minimum temp on the 9th should be 12 degrees above normal.

Spokane Weather

Cold temperatures are expected to hit Spokane and the Inland Northwest a day earlier than forecasted yesterday.  A decent amount of precipitation should join the cold spell to create a nice blanket of snow in the region.

NW River Forecast

The 10-Day River Forecast is up from the STP forecast for each of the next ten days.  The 10-Day River Forecast is showing a very large increase over yesterday’s forecast for each of the next five days as well.

Gas Reports

Mid-C Nodal Power Summary (by Plant)

Mid-C as a whole increased over 165,000 MCF driven by increases to several plants, but especially Grays Harbor which saw a jump of 56,000 MCF.  Mint Farm dropped from 21,778 to 0 MCF.

Hub-Level Gas Demand

Demand increased in all hubs aside from SP15 where it dropped just 25 MMCF.  Alternatively, NP15 increased 189 MMCF.

Outages

Major Unit Outages

15 total outages today including 8 in NP 15 (535 MW of gas total), and 7 in SP 15 (1500 MW of gas total).  Each hub also had over 130 MW of solar come offline as well.

Renewables

SP15 Renewable Generation

Solar generation could have potentially large days today and Thursday, where both could produce more than 6600 MW.  Last week peaked on Saturday with 4919 MW.

Mid-C Renewable Generation

As the first real coldfront of the year moves into Mid-C, it doesn’t look like it will bring much wind with it.  Wind generation is expected to peak tomorrow with just over 3100 MW, down over 1300 MW from last week’s high.

Transmission

Transmission – MC-NP

TTC has remained steady at 3900 MW after two sharp drops last week.  Flow slowly ramped up to a daily average of 3423 MW and 3440 MW on the 3rd and 4th respectively.  Flow peaked at 3662 on the 4th (7:00 AM).

Transmission – MidC to BC

The MC-BC daily average hit a low of -1634 MW on the 4th, but returned to last week’s average in the following two days.  We saw flow move north briefly last week, again on the 3rd, and its peak at 1:00 PM on the 4th with 615 MW.

 

Have a great week,

William

Good Afternoon,

The NWRFC released its 120 day forecast this afternoon and brought us no surprises, no blog fodder to feast upon, just a reasonable forecast (relative to last week, that is) that will fail to move the market or generate strong emotions in everyone but the very neurotic. As such, we’ll use this week’s update to share a few comments on the methodology, sprinkled in with our insight on this week’s forecast.

Monthly Energy

In this report we compare the block of energy, by month (flat, all hours) for each of the last five forecasts, and compare to the average of the five (gray bar) and to the five year average for all STP forecasts (red bar) for those respective months. The latter value is somewhat obtuse, let us elucidate further. For January, the NWRFC has been pumping out #s every week since August; they did the same in WY16, 15,14, etc. The red column is the average of every forecast released since 2012 for that particular month.

From the above you can then draw a few relative conclusions.

• Dec – Down 250 aMW: it is lower in today’s forecast than it was last week, but is higher than the average of all the forecasts – and higher than the average of the last five (including this week). As for its reasonableness, we are not surprised to see an above normal number given precip that is 2-4X normal since October, plus toss in the approaching cold which the utes will draft to meet load, and it should be higher. What is perhaps the “surprise” is that the forecast, for the balance of the month, didn’t go up given that the 10 Day Forecasts have been consistently higher than last week’s STP:

• Jan – Down 110 aMW; Dec and Jan have been positively correlated since the start, and they typically should be, so no surprise it is down; maybe the surprise is that it is not down more given that Dec includes more of the Oct-Nov precip effects and it includes one assured cold snap
• Feb – Down 150 aMW: same pattern, just walking down, reverting to the mean
• Mar – Down 34 aMW; rounding error, proves they actually run a model

Daily Energy

The variance to the 5 year average is highlighted here (NOTE: I turned off the previous 4 weeks and am just showing current, last week, and the 5 year average, by day). The delta in the back-half of Dec warrants a zoom:

From Dec 20 to Dec 31 is off 500 aMW; that has to give small comfort to length given that it is also outside of most reasonable people’s temperature forecasts.  Call it bullish, mildly.

Year on Year

In this plot we compare prior years to this week’s forecast but the twist here is that those prior years reflect the SAME week as the current forecast. We all know the NWRFC bakes in a lot of volatility in their 120 day, like some months will see 5000 MW swings over the 120 day life of the forecast, so matching weeks removes some of that volatility. Here we see that the current Dec forecast is actually in line with the prior years, on average, for this first week of Dec. Jan is dwarfing 2015 and 2013, but is less than 2014, which was a very big water year (NOTE: these are actual calendar years, not water years).  Similar story in Feb but March sticks out like a thumb that was battered with a sledge hammer – higher than any year we’ve seen in recent times suggesting it is potentially over-stated. Of course, this is a regulation month and much of March’s volatility can be explained by flood control drafts, not all, but much. At this stage we think it (March) is over-stated and will be walked down.

Day of Year

Same as the YOY (Year on Year) report above, except plotted by DOY (Day of Year). Note how similar 2014 and this year are, until Feb. Also note how much additional energy is projected versus 2013 and 2015, like a couple nukes worth. And there is every reason to expect to see that energy hit the market given five year highs in total Mid-C storage.

Good Morning,

The cold is building, but so is the precip outlook, rendering mix signals on our longer term outlook. We like colder weather but positive precip anomalies make us question how much term length to carry. Before drawing hasty conclusions, and pay the fortunes crossing wide bid/asks, let’s first study the facts.

Fact One – the market sold off hard on Friday

We didn’t like DEC Friday morning, not because we feared the fundamentals, we didn’t like what you liked … the Dec had been bid up, we thought to levels a shade too high, now that you beat it down we can like it again….if the fundamentals concur.

Fact Two: The ISO prices don’t really suggest anything too crazy, the markets were pretty quiet over the weekend:

Both the SP and NP were off $4.00; the NP still commands the premium, but note the stability of each as reflected by the very slight variances between the HA and DA markets. There just weren’t any surprises over the last couple of days, nor were prices very high, but the cold hadn’t arrived, yet. It is coming, and it is growing …

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Weather Forecasts

The composite hub temperatures are mostly unchanged, except for Mid-C:

These reflect the next ten days and are weighted off of demand for all cities within the hub … note the Mid_C is off five degrees from a week a go, and off almost two degrees from yesterday. Everywhere else is either unchanged (from yesterday) or is warmer.

Mid-C Composite Temperatures & Precip

Apologies in advance if we dwell too much on the Mid-C in this post, but it is the only hub that is experiencing the greatest material AND fundamental changes, though NP is not too far behind, as we will see shortly.

Fact Three: The cold has grown colder, the composite Mid-C lows are now 22 degrees for tomorrow -these were in the high 20s going out last week. That is the good news for the bulls, the bad news for the back-end bulls is the rally in the precip outlook, the hub is poised to see big anomalies this week:

Fact Four: On Friday we saw less than an inch, today it is 1.13 inches, not a lot (recall in October the composite was north of three inches on many days), but all of that is coming down as snow ..more on that later. Also worthy of mention are the three inches heading towards northern California …that will dump a lot of snow in the Sierras. But yet we digress, once again, and wish to return to temperature. Let’s examine Portland, OR:

The cold really isn’t that cold, a low of 27 for tomorrow, but note the confirmed cold next week, on Thursday; same temperature, 27, and Friday’s forecast called for exactly the same. Also note the big precip heading Portland’s way later this week, and more behind that. This is what bothers us about our Q1, and 2, length at Mid-C. We like to see dry if we are long, we get nervous seeing wet.

Sacramento, CA

Wet and warmer, the hub has turned a shade more bearish, or less bullish if you prefer, given a warmer and wetter outlook.

Lake Tahoe

Not Donneresque in quantity but it might end up being the biggest storm of WY17 with its four inches of precip, all coming down white north of five thousand feet; below that it will be rain and the hub will realize an increase in hydro energy, nothing is even close to hydraulic capacity:

Warmer weather, wetter weather, is bearish no matter how you slice and dice it …the cup isn’t half full, it’s three-quarters empty.

Burbank, CA

Fact Five: What can you say here; the weather is warmer than it was on Friday and every day is above normal. Bearish ….

Phoenix, AZ

Looks like Burbank and our takeaway is the same … Bearish. Loads (actuals, week on week) are bullish, every hub is up, or unchanged:

Our Wednesday post should be fun, we expect the Mid-C to be up 4000 MW; these load changes are reflect just really weak loads last week, though it was cooler yesterday, but nothing like what we’ll see in the next couple of days.

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Hydro

We know California is going to get soaked, that hub will realize almost three times as much precip as the northwest. Let’s take a look at the city forecasts:

This table was sorted descending, on Current (CUR) cumulative ten-day precip. You could have almost sorted the table on latitude, ascending, and ended up with the same order. Portland gets almost twice as much precip as Seattle (good, I live in the latter), clearly this is a storm whose center favors the southerly latitudes, but not too far south, Burbank gets zippo.  Note also the inch or so that Spokane, Boise, and Kalispel will receive …and all of that will come down via frozen water molecules.

And the whole west received  a decent amount of snow already, over the weekend:

Mid-C Basins

Fact Six: Almost every basin rallied 10% … in a single day! That speaks to both the amount of snow that fell AND how early we are in the water year. That same amount of snow in February would be lucky to move the needle 1%, which is why one should be cautious about big positions in Q1 and Q2 – that are water supply driven. Way too early to bet the farm, even if the farm is owned with OPM (Other People’s Money).

Other Basins

Whatever snow came down over the weekend didn’t come down outside of the northwest – several CA basins realized drops (again, speaks to how green WY17 is on Dec 5). All of that will change by this weekend … guessing every CA basin will be above normal by then.

BC Rivers

Fact Seven: Arrow finally woke up; discharge is up 400% from last week …. most likely running hard to serve BC’s own loads. Regardless of why, there is an additinal 27kcfs of discharge, all of that incremental water is heading towards Coulee rendering the Mid-C a lot more bearish.

Sideflows

These stations are mostly unregulated and are a collection of smaller rivers that dump into either the Snake or Columbia. We use them to track natural river flows and all five indexes are off, week on week, and are now back to normal whereas they have been well above normal for the last two months.  Call it bullish, or just call it winter – most precip is now coming down as snow.

Mid-C Rivers

Coulee is up from increased inflows from Canada and BPA generating to serve load. The silver lining here is the declining reservoirs, though those are still at five year highs.

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Generation

Fact Eight: The ISO has some new outages, in total there are nearly 3000 MW more units off line today than last week:

New Outages

Recently Returned Units

Anytime you have more units fall offline than return it is bullish, but is it bullish enough to make a difference? Doubt it, neither hub (NP or SP) is even close to stressing out their systems, it is just not cold enough, and the Mid-C continues to export:

AC Line

The line almost filled over the weekend, apparently the FTR owners like the ISO price more than their native numbers. The DC is not near as full (% wise):

So they liked the SP price even less; look how much unused capacity was on the line. We think a lot of that capacity was BC’s:

Fact Nine: They were net buyers yesterday, for seveal hours. That should suggest how cold, how much new load, there is in British Columbia. Apparently, between relatively weak prices,  decent domestic loads, and the expectation of big prices today and tomorrow was enough for BCH to buy.  We see this is bearish for the next couple of days …if the Canadians decide to resume selling. Maybe the DC can absorb another 500-1000; the AC can’t take on anymore, leaving any incremental BCH selling stuck in the Mid-C, quashing prices, smothering hopes for the longs.

Before moving on to our conclusions, let’s look at the Ansergy Gas Demand Indexes:

All hubs are up, week on week, and should really soar on Tuesday. This is putting pressure on storage, the draws are growing:

And prices are rallying:

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Conclusions

• BOM
  • Mid-C
    • 
    • Big selloff on Friday, maybe too much, though the market is still over the forecast. We left things short the on/off (long off, short on) and will keep that position
      • Dec On Off
        • 
        • The spread is wide, we see water being relatively tight and expect big off peak loads; doubt we see this clear at $8.00 …SHORT the on/off
  • NP
    • We sold our length (on peak) Friday and were flat, but laid on a few pieces of the off, which sold off a small amount. We’ll keep that off peak length going into perhaps the coldest two days of 2016-17.
  • SP
    • There is nothing to like here or at PV, but we don’t have much length to hedge and will be flat at both
• Q1
  • Mid-C
    • 
    • The length here hasn’t fared poorly but we like buying off of dry, now its wet, and like the trade less as a consequence, but bid/asks are steep and like the cold the northwest must manage over the next couple of days and will consequently stay long. Though, if we see strong Feb-Mar bids we’d break the Q up and be long the Jan and flat to short the back.
  • Q2 – will stay long, though we’d rather see another dry week, but the fact remains that snow levels are below normal, and now we are in Dec, and now snow levels start to matter. We’ll watch and see how things play out but are getting close to liquidating this long position; if the market rallies all things Mid-C off of tight cash prices we’ll be one of the first sellers; if precip builds over the week we will be one of the first sellers; if cash doesn’t move and precip builds, we will be one of the first sellers… otherwise, we are bullish because we are long, and that’s a fact.

 

 

 

Good Morning,

Wow, the market loves the Mid-C; the bom jumps $3.00 this week; it loves the NP, too. It should love them both, we loved them, its cold, its dry, gas is tightening up ..what’s not to love? I’ll tell you what’s not to love, loving that which is loved, we prefer loving that which is scorned, that which is despised and hated; now that what we love is loved by all, we no longer love it.

We’ll steal our own thunder and come out and say it …we’re selling BOM Mid-C Short…there, you have it, don’t even need to read any more, but, if curious, read on ….

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Demand

Let’s start with actual loads, they are all up, week on week, but be careful with statistics … though they don’t lie, the statisticians often do. In this case, the numbers are true, all hubs are up, but what was last week, last Thursday …. Thanksgiving. The hubs better be up, and they are:

Up, and it isn’t even that cold, but just goes to show how low loads get when every business in the USA shuts down, and its a very warm Thanksgiving.  Looking ahead, weather gets cold, but it didn’t get colder.

The Mid-C warrants two weather forecast plots, not only because it is the biggest hub, and it is the most volatile hub, but because it is the price-setting hub in the winter time. Mid-C is why everything else, even PV, had rallies this week. Acouple of observations on today’s forecast:

1. The cold falls on a Monday-Tuesday, that is good, but it is short-lived. By the time you get around to trade the BOM monday morning the dailies will be liquidated and bal week will be looking at declining loads.
2. The cold is short-lived, by week’s end temperatures are at, or above, normal; case in point, is Portland, OR
   1. 
      1. Portland realizes a whole slew of above-normal days following the Tuesday “cold snap”; but even  Mon_Tue is not that cold; we’d be doing handstands and backflips if we saw some teen posts, even low 20s, but 29 for a low, really?
3. The next 8 days are dry – that is the most salient fact in this current forecast. Not bone dry, just not wet, which goes a long ways to protecting Q1-Q3 length in the northwest.

Sacramento, CA

Sacto is more bullish, relatively speaking, than Portland as it realizes seven days of below normal but, alas, its forecast has backed off from yesterday – the wrong direction for a trend, a reversion to the mean suggesting this first winter event is lessening, not growing.

Burbank, CA

That is just a bearish forecast, every day is above normal; that silly cold spike (Dec 14)  from three days ago was reversed, now it’s a warm anomaly.

Phoenix, AZ

Sun City is still chilly, those really early morning tee times might want to be reconsidered, but this forecast has backed off of its cold, too. Symbolic for all of the WECC west-side cities.

We like the bottom one more, but that one you don’t get, it was Wednesday’s, the top one is yesterday’s, the cooling trend is reversing …not that it can’t reverse again and grow colder, we just aren’t seeing that and refuse to be bulllish because we are long, we would rather be long because we are bullish.

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Hydro

We already said its dryish, not dry as in nary a snowflake, just not wet, and that is all we need to stay long in the Q1-2, especially as we watch the northwest reservoirs mean revert ….

or a plot, maybe …

Storage (KAF in the above) has steadily come off over the last three weeks; it had steadily risen over the previous six weeks off of those biblical rains but those are gone, one for the history books, now the outlook barely holds normals and reservoirs are falling. We know they weren’t falling because BPA was drafting for dollars, and we know they weren’t drafting to serve load — but BPA will be drafting to serve loads next week:

The NWRFC 10 Day has added about 800 aMW of hydro energy versus last Monday’s STP …that incremental energy is not due to falling rain, it is coming out of the reservoirs …helping to quash any cash rallies …but also helping to support Q1-Q2-Q3 length. Bullets shot in Dec are bullets not available down the road.

One indisputable bearish item for the term is their Water Supply outlook, let’s take a look:

Wow, TDA gapped 4%, the Flathead gapped 5% … it must have really snowed hard, right? Wrong:

We don’t have a single major production basin at normal, most are barely half of normal; granted there was a rally, week on week, but the rally was off of next to no snow. Hard to get to a 113% of normal on the Kootenai when the snow basins are at 51% … we think those numbers must be walked down with normal precip going forward, and we are not really seeing that.

Everywhere is above normal, but not crazy above, so just don’t get to the #s the RFC is at. We also think that post-cold the reservoirs will be even lower and perhaps than the RFC will be fed new regulation #s and lower their outlook. Let’s say they don’t, and they keep Coulee above normal, that suggests a rather big draft, perhaps 1230’ish, much of which will be pulled in Q1. Maybe it is getting time to start thinking of selling the Q1|Q2 spread? Nah, not yet, we’ll stay long both of them.

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Generation

Not a lot to report here, a few new units off line:

and a few came back ….

Cold typically is associated with calm and the forecast is showing total windi (WECC) off almost 4000 MW for next week:

it’s bullish, but nothing like what the collective demand will do next week:

Peak wecc demand should be 6000-7000 mw higher than today, couple that with the 3000-4000 mw less wind, and you get a recipe for some nice price action.

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Transmission

We found the net flows out of ZP to be worthy of a chart:

Note the massive drop over the last two days in northbound flows on Path 15. Doesn’t make sense, NP’s loads are up, right? But it does make sense if ZP’s and SP’s loads are up, as well, which is exactly what is happening …net effect is to squeeze NP even harder.

The AC is interesting just because of the TTC derates, but it might get more interesting early next week.

Will the hub (Mid-C) keep exporting when it scrambles to meet its own loads? We think yes because the price in the ISO will warrant the northwest to crank up everything it owns; we’re already seeing the genco’s sweep away the cobwebs from their “Start buttons”:

Units are coming back to the fold, we think all of these plants will nominate on Sunday for Monday; we also think every hydro-owning utility will be running water through every turbine they own …and we think the AC will be full.

The northern intertie is nearly full, south-bound:

The Canadians like the price, what isn’t to like after seeing the Mid-C wallow in the teens …expect our friends in the north to be aggressive sellers next week, though their loads too will rally, but the price in Amerika will be too tempting.

---

Conclusions

• BOM
  • SP
    • 
    • We were short on Wed, market trickled up, but we see nothing to change that sentiment …. SHORT
    • NP
      • 
      • We were long but won’t stay that way and will take profits by selling into strength……….FLAT
      • BONUS TRADE – NP Light Load
        • 
        • The model really likes this, we think the northwest will try to conserve bullets for peak hours, and its coldest at dawn …we’ll go long the off peak
      • Mid-C
        • Same trade as NP, except we are going to sell MId-C on peak short and go long the off peak
          • 
          • The market is over the forecast in the on, under in the off, and we’ll go the opposite and be short the on/off
    • Q1
      • Mid-C
        • 
        • Market is moving up in sympathy, forecast is not really changing – note the big gap from a few weeks back, mostly gone. We still like owning this in front of the cold, some of that Q1 water is going to get burned next week, plus its not super wet …………….LONG
      • Q2 MIdc – still long.

 

 

 

Good Afternoon,

Here are a few highlights of what’s going on in the west today.

Natural Gas Markets

Nat Gas Summary

Every hub aside from PG&E Citygate (down $0.01) is up day-over-day.  SoCal Citygate showed the largest nominal increase ($0.19), or 5.7%.

Demand

SP15 Loads

SP15 loads rallied on the 28th and maintained that demand, for the most part, for the following two days.  Loads are up roughly 500 MW week-over-week as of yesterday.  Year-over-year load totals are nearly identical with yesterday just 60 MW short of last year.

NP Loads

NP15 has also maintained high demand for the past three days, though the week-over-week difference is slightly larger at 650 MW.  2016 loads remain just below 2015 (-25 MW yesterday) for each of the past seven days.

Mid-C Loads

The difference in Mid-C year-over-year loads began to converge beginning on the 29th (difference of 1600 MW compared to 3000 MW two days prior).  Yesterday was 945 MW higher than the week prior.

Temperatures

Burbank Temps

Burbank is no longer expected to dip below normal as the forecasted minimum temperature on the 6th has been adjusted from 35 to 43.  If the forecast hold true, we may not see below normal temperatures for at least two weeks.

Spokane Weather

Spokane and the Inland Northwest remain on pace to drop 11 degrees below normal on the 6th.  The cold spell will recover rapidly before again dropping well below normal, though this time it has potential to set a 10 year record as temps are forecasted to hit 8 degrees (10 year low set at 10 degrees).

NW River Forecast

There is large separation between the 10-Day River Forecast and the STP for each of the next ten days.  This difference is highlighted on the 4th with a difference of nearly 800 MW.  There has also been a higher forecast over yesterday for most of next week, especially on the 4th and 5th.

Gas Reports

Mid-C Nodal Power Summary (by Plant)

Mid-C as a whole increased over 25,000 MCF, largely driven by Mint Farm jumping from 0 MCF to 21,778 MCF. Coyote Springs II dropped from 39,024 to 0 MCF.

Hub-Level Gas Demand

Demand decreased 504 MMCF in SP15, the largest nominal change of the six hubs.  Rockies, Mid-C, and Great Basin all increased while NP15 remain unchanged.

Outages

Major Unit Outages

Four new outages today, three of which are in SP15 where 704 MW of gas came offline.  NP 15 recorded one outage, just 35 MW of gas.

Renewables

SP15 Renewable Generation

Solar generation looks like it may in a bit of a lull for the next several days before reaching much higher potential next week where we could see 6500+ MW generated on the 6th.  Today is expected to generate just 3758 MW.

Mid-C Renewable Generation

Mid-C saw heavy wind generation for most of yesterday where it peaked at 3932 MW.  There could be a two or three hour window tomorrow where generation could breach the 4000 MW barrier.

Transmission

Transmission – MC-NP

A lot of activity over the past three days for MC-NP.  TTC collapsed twice over that time span, each time dipping to 2100 MW, off 1800 MW from normal for the past week.  Flow responded by dropping to 1535 MW on the 29th and 1624 MW on the 30th.  The decrease in flow lasted 3-4 hours for each of the two drops in TTC.

Transmission – MidC to BC

MC-BC hit a weekly low early morning yesterday at -1960 MW before briefly reaching positive flow just a few hours later.  The rapid recovery actually raised the daily average above the 29th.

 

Have a great rest of your week,

William