Good Morning,
The news that wasn’t news yesterday was the news that the Corps will draft Coulee to a miserly 1252′ by the end of April. As Joe Dimaggio said, “deja vu all over again.”
There will be a draft, but it’s weak when compared to similar water years, but further back. Let’s look at the last couple drafts:
Last year was 1253′, year before 1248′ – both drum gate years; this year split the middle with a 1252′. The Canadians will put 3 MAF into Coulee by the end of March, which is about similar to what they’ve done over the last two months. Coulee will evacuate 3 MAF by the end of April, and 2.5 of that comes out of April. There is little draft elsewhere, DWR fills.
Interesting, because one would think this is a relatively dry year when it isn’t:
The most recent Apr-Sep at TDA is 99% of normal; we’ve already discussed that normal is no longer 100%; normal is 94% if you look at the last 20 years. In other words, 2017 is shaping up to be a “big” water year and somewhere down the curve is going to get spanked. When, which month(s), will entirely depend upon temperature because the volume is becoming increasingly fixed; we are now left with just a timing uncertainty. Let’s see where things are right now, then draw conclusions.
Demand
We’ll start with the MidC as this hub will have a greater impact on every other WECC hub than those other hubs themselves. That is, when the snow starts to melt, which in this forecast doesn’t come anytime soon, at least not anytime in Feb on the Upper Columbia; even the Snake is going to get a reset after next week with the colder weather in the 11-20. That said, next week will be the warmest the Mid-C has seen since before Thanksgiving.
Loads will decay, and natural river flows will increase, but is that enough to boot gas off the margin? We, and our model think not, though much depends on how BPA manages its reservoirs and it does not appear the Corps has taken away its flexibility.
California weather is just average and barely deserves this sentence.
The interior cools, but not that much, and mostly this is a bearish forecast, especially for Palo as it sheds the three air conditioners that were turned on yesterday.
We noted that NP surged past 2016 loads as did the Mid-C; doubt we see the MidC post gains year over year next week. The rest of the hubs are mired in normals.
This is a new dashboard for you “Actuals” aficionados; we’re one of those. We love the actuals, and they are interesting, really. Palm Springs boasted an 84 for a high but Burbank was just 77, and no one turned on the ACs.
Check out the surge at Billings, MT – that fair city rallied from a chilly 11 to an Al Gore-esque 49, in a day! And note the Max|Min spread is off the chart. Also take note of Boise’s mid 40s for a low. We like this dashboard; you should too.
Hydro
The Canadians put the brakes on flows out of Birchbank, probably because the price is so awful and they quit exporting. Look at the insane flows in California, off the charts and could be the 2017 highs. BON rallied 20kcfs and flows at IHR are picking up steam; so are flows on the Pend Oreille as ALF discharge rallied. Let’s take a closer look at the Corps plants:
All of the changes on the Pend Oreille are from drafting the lake at ALF; meanwhile, Libby is curtailed and is just an example of BPA’s flexibility. They take water out of the Pend Oreille and cut flows from Arrow, Duncan, and Libby. Hence our concern that single digits won’t happen in Feb unless it becomes warmer than it is. Or rains a lot harder.
This forecast is wetter than Wednesday’s; there are hints of wet in the 11-20 when earlier there were none; also a strong event in the 6-10 day; by no means is this outlook dry.
Trump agrees, he put about 2500 aMW more energy into the MIdC than Monday’s STP, we think that might be overdone.
TransGen
Gas Noms at MId-C have fallen off the proverbial cliff; the cribbage boards have been pulled off the shelves as the engineers hunker down for a long and wet spring.
See what I mean? Calpine is the only Genco that seems to want to generate at Mid-C, the rest hate the price and would rather catch some ZZZs until it looks better.
Mid-C is long, its setting 14 day highs in exports to Cally, and BC Hydro is buying, some, which is another reason we aren’t willing to puke our bom MidC length – if things get ugly enough Powerex can import another 2000 MW; Mid-C can export another 2000-3000 MW, and we just don’t see 5000 MW of uncontrollable new energy. BPA has shaping bullets, so does Powerex.
Conclusions
- Feb
- Wow, were we wrong on the MidC BOM … or were we? The dailies, until yesterday, were settling above the BOM price, now it’s trading at a rock-bottom 7.2 Heat rate:
- And it’s a falling knife chart, and we have both hands out trying to catch the handle, but our gloves are on, so even if we get blade, we won’t get cut too deep. Bottom line, we like cheap, get through next week and natural river flows will freeze up, and loads will pick up a spell.
- MidC – LONG
- SP&PV – less conviction in those, let’s look at March
- And it’s a falling knife chart, and we have both hands out trying to catch the handle, but our gloves are on, so even if we get blade, we won’t get cut too deep. Bottom line, we like cheap, get through next week and natural river flows will freeze up, and loads will pick up a spell.
- Wow, were we wrong on the MidC BOM … or were we? The dailies, until yesterday, were settling above the BOM price, now it’s trading at a rock-bottom 7.2 Heat rate:
- Mar
- Ugly set of charts, so ugly we have no choice but to be long all the HLs.
- Apr
- not as ugly, suggesting the MAR-APR might be looking tempting
- Mid – Long March, Short April; remember, BPA is pulling 3 MAF out of Coulee in that month, and the odds of it being warmer in April than March are in your favor, meaning more natural river flows
- SP|PV April
- Long that silly priced spread; trading at contract lows, seems a pretty cheap place to place a bet
- LONG SP|PV April
- Long that silly priced spread; trading at contract lows, seems a pretty cheap place to place a bet
- MIDC Jun|May
- It’s come off some, but not as much as the forecast, and we haven’t seen a lot June in the STP; our model is pounding it with all of this snow. We don’t think June settles over May in this type of water year, or at least it won’t without record June heat.
- SHORT JUNE, LONG MAY
- It’s come off some, but not as much as the forecast, and we haven’t seen a lot June in the STP; our model is pounding it with all of this snow. We don’t think June settles over May in this type of water year, or at least it won’t without record June heat.
- MidC Jul: JUN
- The forecast is liking the July over the June, we concur, but liquidity is poor, and you can get the same trade on with the May : June; if we put something on it would be long the July
- not as ugly, suggesting the MAR-APR might be looking tempting