Good Morning,
Some good news and some bad news, but hey, this is power, what do you expect? Let’s start by looking at some market data:
Gas opened lower in pre-market and has made a steady rally since now its above yesterday’s close:
Dead cat or real? It’s real enough to rally power markets for today, at least, but when you look at yesterday’s 6-10 day, you’d think the sky was falling:
We’d love this chart if it were made for July 15; unfortunately, it’s made for Jan 15, and it’s pretty hard to find the silver lining in this unless you own golf courses in Maine.
Back to power, we don’t own any golf courses, and we noted the forward sentiment at SP15 had a reversal over the last couple of days:
Where we were spouting off that going long was potentially one of the BIG THREE of the year, these reversals off of stupid lows makes us less enamored and now pull that idea of “big three”; long SP is probably still safe, but compelling? Nah.
The ISO markets are compellingly miserable; HA prices are consistently lagging DA suggesting how anemic these markets truly are. What else would you expect, the state has the most water since Noah loaded that last jackass on to the Ark.
The Cosumnes is flowing 20X the Colorado, LOL.
Forget that stat; it’s flowing more than the Pend Oreille and the Kootenai combined. LOL, again.
Demand
Loads are off, duh, but what caught our eye were the lower lows realized in the southwest; both at the Rockies and Palo. These aren’t just a fluke; the lower lows are consistent across most hours; not suitable for Light Load; no wonder Salt River is ready to puke Navajo.
The weather outlook is not bearish, in any sense of the word; the Interior barely gets to average, then the 10-20 day outlook returns it to below normal territory.
California, well not so much; the soggy state is just bearish; above normal, wet. At least the lawns will be green and the toilet water clear for the first time in a decade.
The northwest cold is still with us, and when it goes away it isn’t replaced with warm, just normal; the hub needs that HDD driven load to soak up the water and it’s going to get it for the rest of the month.
Hydro
Loads won’t save the length, maybe hydro will? Nope, it’s bearish. We already talked about Kally, no sense rubbing their noses in the mud puddles anymore; besides, this is Flood Control Week. Sometime, the Corps will release their initial number; we think, or think not. Heck, they can’t even release their release date:
I figured we were in WY17, why are they still showing WY16 release dates? Their negligence aside, we are confident it is coming out today or tomorrow; last year they published on the 12th, a Tuesday. Let’s get out the Ouija board, and play guess the draft.
We see builds in both the Upper Columbia and Snake basins, but we only care about the TDA:
Wow, the NWRFC has jacked its Apr-Sep outlook to 99%, up from 97% on Friday; Ansergy at 100%.
Using our new Flood Control tool, we pulled out the water years that were closest to today’s TDA (99%) and returned the Apr 30 Coulee elevations …. drum roll….. 1236′ to 1243′; our board says 1241′ because BPA hates drafts.
The forward outlook is wettish, not Kalistan wet, but not dry, just slightly below normal, but with the lingering cold weather all of it comes down as snow and we think the forward adjustment used in the flood control will be a positive anomaly and drive the drafts deeper, or at least they should.
Speaking of snow, there is an awful lot of it on the ground in the hydro production regions; Spokane is sitting on nearly two feet, so is everywhere upstream from that fair city.
We mention this fact because the Columbia Basin just added a new reservoir, it’s called the ground, and for the last 30 days all of that precip that has come down, and there is a lot, is now sitting in that temporary reservoir waiting for some warm weather. When that warm weather arrives every river in the hinterland will flood, Spokane River might hit 30kcfs, Pend Oreille maybe 60-70 kcfs, which puts 100kcfs into Coulee before taking into account Arrow and Duncan discharges. All of which suggests there is a massive puking just around the corner, massive. Own Feb at your peril, we won’t touch it, but from the short side. Maybe it stays cold in Feb, but doubt it; we think we’re looking at an event that will dwarf this week’s flood control in terms of impact on cash Mid-C. Just don’t know the date, yet.
TransGen
The ISO has seen a sharp spike in outages, nearly doubled to 10k yesterday, off a bit today. Not sure what is going on with CGS, still not running at 100%. SP had a healthy dose of wind, on top of that tsunami of river water, the state is flush with non-thermal energy.
Not much has changed in the exports; most lines are flowing slightly above their one-week averages; the DC spiked yesterday and exported more than the AC on the same hour; I guess NP told BPA it didn’t’ want its energy.
We added some more Transmission dashboards today; these are based upon Balancing Authority flows (one BA to another BA); unfortunately the EIA doesn’t make the BAs report this in real-time like they do Demand, but it does provide some fascinating insight into how energy is moving around the WECC (outside of the ISO or BPA):
Flows into California from the Great Basin, Palo Verde, and Mid-C. All of these flows are derived from individual BAs which can be accessed from the BA Trans Flow report.
These are the flows out of the WECC, excluding the MidC to Alberta.
Interior flows include Great Basin to Palo, Mid-C to the Great Basin (Path C), and the Rockies to Palo.
Another new dashboard is the Power Plant Noms by hub:
We made this one using the multi-line and based it off of the last 30 days. In a snapshot, you can see exactly how the power plants are nominating.
Demand is off (core) at Mid-C, no surprise, it warmed up. We found it interesting to see how far demand has come off at NP versus a week ago, while SP demand is actually up a tick or two.
Conclusions
- BOM – the WECC is not warming up, at least everywhere but California, and holding length there is not a bad thing:
- It seems the market found a bottom, and everything is up a tick or two, but the forecast; it remains mired in the mud. We owned the SP and the Mid-C on/off; the SP did alright, the on/off was up a touch, too
- Though the forecast still lags, it doesn’t have anything it for the low-level snow melt, which we think could crush light load into single digits. We’ll keep that trade on … MidC on/off … LONG
- SP15 …LONG
- Feb
- We were short the Feb Mid-C and got spanked by an overly exuberant market … SHORT it some more. We are convinced there is an epic Mid-C meltdown in the making, just not sure the date, yet; but know its coming and want to be ugly short when it hits
- SP rallied some, will rally more today off gas ticking up; we think the spread (SP-MC) looks interesting
- The forecast has tightened up (Spark, 7k) while the market has spanked it; now we see parity and like owning this, especially given our dire outlook for MId-C once things warm, and melt. Long the spread
- March rallied, but we’d be cautious about owning Mid-C in front of Flood Control and the possibility of drum gate work. This water year is making that project a possibility, whether the Bureau does the work, or not, remains to be seen. If they do, you can take that April draft and jam some of it into March, making us fear that month; we already fear it given all the frozen KAF in the interior; that KAF will be KCFS soon, then all hell breaks out and MidC trades single digits. The sky is falling, just not yet.