Good Morning,
The Northwest appears to be surviving, perhaps thriving, through some of the coldest weather it’s seen in years. You can thank those record rains in October and November, the NW utes are full of bullets and, surprisingly, they really aren’t spraying that many of them … more on that in the hydro section, let’s see how cold it got, and how high loads went.
Demand
Yesterday’s Lows
Bone-numbing, tell your grandchildren cold? No, not really. Portland flirted with 27; Seattle posted a better number, 22, but the rest of the WECC basked in the mid-40s. It’s hard to get the market to go nuts if everyone doesn’t help, and no other hub helped Mid-C in this event. It was a big yawner, though they all got some virtual price love off of Mid-C’s pain. Now that love is getting pounded away in the forwards, as well it should, given that the world is turning back to normal, if not above normal.
The WECC interior rallies hard, up 10-20 degrees in the major load centers; bodes poorly for loads (gas and power).
California doesn’t necessarily rally, it already was above normal, at least Socal was; Nocal had some modest cold, but that hub was more impacted by Mid-C thumbing its nose via the AC line than anything else.
And then there is Mid-C, the hub we love and hate at the same time. Now we hate it because it didn’t blow out, not like it used to in the good old days when a tight market could run up into the 100s pretty easily, now it hits $55 and everyone cheers. That cheering will die down soon as temps rally and prices crater; by next Monday party is over, and all that is left to do is sweep up the graffiti, no one hit big home runs off this event, maybe singles and if you ran fast, maybe you stretched it into a double; hopefully you weren’t standing at the plate watching three strikes pass by, in slow motion.
Enough bad sports analogies, how about those loads?
As expected, only the Mid-C gets an honorable mention, no ribbon, just a nod. The Rockies made a run but faded, not even surpassing last year. Let’s dive deeper into Mid-C:
Up 4800 MW on the evening peak from a week ago; let’s give it a red ribbon. That should have stressed out the system, right? Before going into the supply side let’s examine the Northwest utes, see how they fared yesterday:
Three get circles: BPA, Puget, and Avista – the rest aren’t worth mentioning. Interesting that all three are also big owners of hydro …and onto that fair fundy.
Hydro
We like this report; everything is on one screen (you can find it in the “Ansergy Dashboards – Water Supply). Our takeaway from the above
- Water Supply dropped almost 2%, going into the Corps first Flood Control this is important
- The RFC jacked its TDA outlook by 7% in just a few days – huh? Now it is back to normal
- BC has pulled 3 MAF from storage in a month – that’s bullish
- NP15 is poised to get washed out to sea with seven inches of precip, and its rivers are already full
- The Snake (IHR) jumped 12% – huh? And with the massive California storm, it is poised to get soaked again – Sun Valley, anyone?
The precip forecast is worthy of a closer look:
We mentioned Nocal gets flooded, but the MidC goes from bone dry (last week) to normal, right before the Flood Control update:
Forget those crazy levels in Nocal; they are nuts, but the Golden State needs the water; water there is like crude in Texas – they love the stuff and just can’t get enough of it, but maybe after this storm washes away their hillside homes they’ll have a different perspective?
We highlighted the last four stations – these are the production centers and all are getting doused, all will have solid snow pack builds over the next ten days. This would suggest close to a normal TDA Apr-Aug forecast and would suggest GCL drafts at least to the mid 1240s, possible deeper; and would also suggest that Drum Gate Maintenance remains on the table, though our source at the Bureau has said they have not decided, one way or another, on doing the work this year. The water supply suggests they can do it if they are so inclined. She said they would make that decision in mid-Feb. If it’s a go, it means the April 15-30 draft is shifted into early March. April-March rolls? Not us, too much uncertainty to gamble on that one -remember last year?
Before leaving the fascinating world of hydro, let’s look at the state of the rivers, starting with BC:
Those flows at Birchbank are five-year highs for this time of the year; BPA ordered all their water sent their way and that is what the Canadians did…bullets galore. We also noted the dismal discharges at the “run of river” projects (red rectangle); its cold up north and rivers are freezing over, same is true in the northwest. Natural river flows are weak, what’s not are the regulated flows, BPA did another masterful job managing our resource. Way to go, feds. Maybe Trump will start trading power? Wouldn’t that be fun?
The Northwest was interesting because it wasn’t interesting – those mainstem flows just weren’t that high, not give that the Mid-C probably posted its CY17 system high for demand. Compare yesterday to any of the last five years – there just isn’t that much of a difference, and more telling, is how much additional capacity the plants had, especially Coulee:
We find it amazing how discharge never spiked yesterday, and the reservoir wasn’t drafted! OMG, no wonder Mid-C cleared $55; BPA could have handled another 5000 MW of demand without so much as a whimper.
California is poised to have a water problem on its hands. Look at the Cosumnes – 10kcfs where it was but 300 CFS last week, and seven more inches of rain heading its way. Might want to sell that river-front property tomorrow, it might not be there next week.
TransGender
Flows first, look at the big cuts in CA exports and look how stingy BC Hydro was with their energy – no love, even with those $55s trading, all of which means they had load issues. Also take a gander at flows out of ZP – they went south , , therewe saw the same thing last time NP got cold.
Big power plant noms for most hubs, even SP15 nearly returned to normal.
Every plant nominated ye; there was nothing left to draw on, aside from more hydro and diesel.
La Paloma 1 returned to service yesterday, a few others trickled back earlier this week.
One of the Colusa units is offline; a few others came off earlier in the week though most were hydro/solar/the wind.
Before leaving this group, let’s look at the Ansergy Gas Demand Indexes:
The Mid-C is up 25%, a huge rally, and sets a three-year high.
Markets
Most telling in the ISO markets is what isn’t there; aside from a couple of gaps in the PacWest BA, it was a big yawner this week.
Mid-C is getting pounded in the forwards; natty is falling again … its ugly out there and getting uglier.
Conclusions
The market is selling off, gas is coming off, more water is heading towards the west, loads are falling as temperatures are rising; the only bullish things are storage – both water and gas. We’ll stay net short, not sure it matters where, just wouldn’t carry the length today. We’ll dive into some spreads and rolls later.