Winter

Good Morning,

Winter is showing signs of abating; we’ve switched over to showing Max Temps for California and the Southwest; that said, the Northwest remains strong price-wise, much less so demand-wise, and now is looking at a material precip event, right in the face of the next Flood Control update.

Gas opened weakly but is staging a rally of sorts:

The MidC has been on a roll, BOM, and FEB, more on that later. Socal and PG&E are at parity and Stanfield has also been ripping it up the past week:

Also, note the spread between Socal Citygate and border; if California is thinking of building a transmission line they might want to reconsider and expand the pipeline capacity into the LA basin; especially after the Aliso fiasco.

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Demand

 

Tale of Two Colors; red in the load centers and blue in the interior, but the cold is off from earlier this month, and the I-5 corridor is now above normal. Loads are already also off from highs from a few weeks back; they’ll fall further.

Mid-C is up a tick or two, week on week, but has tumbled materially from the Ice Age of two weeks back. Everywhere else is sideways, aside from the Rockies which is materially up.

California will now report Max Temps for the next nine months; note how many Climo upticks Sacramento has over the next twenty-one days – about one a day; the tilted earth is beginning to tilt towards the sun, in the northern hemisphere and will increasingly lean further in that direction for the next five months …and it shall grow warmer, and someday someone in the Golden State will turn on an air conditioner and a swimming pool chiller and maybe a hot tub chiller, too, probably Al Gore already did; he probably runs his chiller/heaters in parallel.

Phoenix flirts with the 80s; they will turn the ACs on those days, for a few hours. The bottom two plots, SLC and DEN, are still in MIN mode and both show another cold snap in the back-end of this forecast.

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Hydro

The Northwest goes wet, arguably real wet, especially where it counts – Kalispell, MT is poised to get an inch over the next ten days and more behind that. It needs it; the Upper Columbia basin is parched.

We circled the IHR and TDA water supply forecasts because of the vast deltas between Ansergy and the NWRFC. Note the tight range in projections at GCL. We don’t get it, here’s why we don’t get it:

The Snake is off the charts deep in snow; three of the four Hbasins are above normal, and the Clearwater is a respectable 92%. So how does the NWRFC get to its paltry Snake forecast?

By declaring the Middle Snake a skier’s disaster area. Is it?

Pictures don’t lie, right? Blue good, Green good; Yellow bad. Where’s the Yellow? The RFC is wrong about the Middle Snake; it is normal to above normal. So back to the Water Supply Forecast:

It comes down to whether you use the Jan-Jul or the Apr-Sep; the latter is a better number, but why is there such a material difference between the two? Look at Coulee, same forecast for both periods. Nine point difference at the Snake (IHR). Makes no sense at all. Either the RFC thinks all of the Snake’s melt will occur in August, or nothing will melt in Feb-March, or it is just wrong. Either way, we disagree and are going to quit publishing the Jan-July in this blog.

Wow, talk about a whipsaw! 1600 aMW cut today from Monday’s STP, then rallies ranging from 500 aMW to 1000 aMW for next week and beyond. Time to post a “Timberrrrrrrrrrrrrrrrrrrrr”? Not just yet, but the door is creaking open, we just need some warm weather, than Mid-C is toast, burnt toast if you’re long.

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TransGen

Diablo #2 is still half offline (600 MW); California is poised to get a healthy dose of wind next week, so is the MidC. Outages turned bearish over the last couple of days, no new gas units to report, actually nothing came back, either.

Powerex yawned its way through the day yesterday, barely even using its Northern Intertie, which goes long ways towards explaining why the AC and DC had such low load factors; same with ZP exports. No one seems to want anyone’s energy.

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Conclusions

• Feb
  • 
    • The MidC just leaps off of those plots; it’s soared 35% over the last ten days, mostly off of a strong cash market; the hub is now trading Feb for nearly the same value as cash is clearing in Jan … and the outlook is much warmer and a storm is coming and the RFC is putting more water into play and the water supply forecast is broken and … and … and ….
      • MidC – naked short both the on and off
    • SP – the hubs on a roll, but we don’t see that ending anytime soon, not with deferred outages, Aliso all broken and Socal announcing no more withdrawals, and potential CDDs some day, maybe in Feb
      • Long the On, though caveated with our comments on March
• Mar
  • 
    • A much less interesting set of plots, which is interesting. The SP is getting no love, though we’re almost guaranteed to have more gas offline and at least equal, if not higher, loads. Mid-C didn’t rally as much as Feb, it shouldn’t, loads will be lower; we’d be tempted to hedge some of that Feb short with length, but won’t, and will pass on a March position. SP, however, warrants a closer look at the roll
      • 
        • Oh boy, we like that chart and will fade you by selling the roll
          • Long March, Short Feb, for size
• Apr
  • 
    • Getting further out, liquidity dries up, but what jumps out here is the Palo On: Off
      • 
        • We grasp no rational reason why that spread (on|off) has melted down, though the market doesn’t seem to know why either and can’t push it any lower, like a double-bottom. Good and safe entry point for our ….
          • LONG PV ON|OFF …for size
• Qtrs