Good Morning,
Winter is Ending; the WECC is warming, even the frigid MidC is basking in balmy 50s most everywhere, except Boise which saw mid-60s yesterday. Down south the California deserts flirted with the 90s and Phoenix was mired in the mid-80s and should broach the 90s sometime this week, perhaps for many of the days in the week. All of which bodes well (from the long side) for the south and poorly for the North. Who is surprised, we all knew it was coming.
Loads in the south are seeing upticks, week on week, as the air conditioners fire up while up north the heaters are cooled down, and loads are falling, hard. Just how hard, take a look:
Demand
The hub no longer posts any premium to last year’s loads; they are behind. With weather warming, even more, those deltas will grow.
Hard to tell the changes in the south because a few of the Utes posted bad data last night, but the summary table summarizes it best. All the heating hubs (NP, MC, and Rockies) are off while the cooling hubs (PV, SP, GB) are up.
Yesterday saw some 90s in the California desert, and Phoenix was in the high 80s. The interior MidC had highs in the 50s; the snow is melting, the rivers are just starting to pick up, more on that in hydro. Let’s examine the temperature forecasts:
Phoenix will enjoy a nice week; it might even feel hot coming so soon after Winter – most of the days this week will be in the low 90s. Not close to the record (10 year) for this week, that was 98, but note the anomalies to normal – nearly 20 degrees.
LA is warm, not hot, but will continue to burn power on the ACs most of this week; the rest of the state is just mild, very little HVAC load anywhere else.
The interior (Boise, Spokane, Kalispell) are warm enough to start the melt but not warm enough to trigger a rapid runoff; streamflows will rally off of this forecast as the lower elevation snow melts, most of the upper will stay on the slopes.
Minimums are still chilly in the interior, cold enough to preclude a rapid melt, except for Boise – Idaho is set for a surge, we already see a surge in the Snake. Behind this week’s weather is a cooling trend which will slow things down, but the cold inertia has been broken, the runoff is beginning, check out the NWRFC’s ten day:
Hydro
Off the charts ugly, though take those energy numbers with a grain of salt. That would be the energy if the water flowed through the turbines, we don’t see that, exactly. There is so much spill across the system:
The Snake at Ice Harbor is spilling about 150% more than it is running through the turbines, most of the Lower Columbia is spilling around 60kcfs.
The other Corps projects are seeing just random spill, except for Dworshak (Clearwater) which is spilling about 4X what it is passing through the generators. All this spilling may force us to modify our Spill model, we are currently over-forecasting hydro energy from now until the Fish Operating Plan kicks in in April.
California is projected to stay mostly dry; the ten day cumulative is less than an inch. Its rivers are backing down but are still well above hydraulic capacity and with the warm weather the snow is melting, there shant be much of a hydro reprieve for months to come.
The Northwest remains wet in its outlook; we are ignoring SEA/PDX and focusing on Kalispell and Spokane – both of which are projected to get an inch or more over the next ten days. Warm rain almost sounds like a Pineapple Express. No wonder the RFC has opened its spill gates.
The Pit is passing 6kcfs; we believe hydraulic capacity is closer to 4kcfs and doubt we see those levels drop as the snow is melting. BON surged north of 300kcfs today, that party has not even started. Coulee can’t capture any inflows in its reservoir; it is now just a big dumb run of river plant. At least it is done drafting, but we always believed the draft outflows would pale in comparison to inflows.
For the next month the project will hold its current elevation; any water that comes in will be passed. Those levels seen yesterday, 107kcfs, will set the floor for probably the remainder of the runoff. The Canadian melt has not really started, some of the lower level projects, like the Cheakamus are picking up, but nothing like what is coming:
Spring has sprung, what more needs to be said? What is unique about Spring 2017 is the amount of snow across the WECC:
This is a new report we wil be adding this week, we are calling it “SWE” as it returns the number of inches of snow water equivalent (SWE). This data is very useful for measuring “when” runoff is beginning versus the anomaly data in the existing reports. As of now, almost all stations are still building.
In the above table, as of March 13, nearly every hub is at or above its ten-year highs. Even BC is having a big water year:
2014 was bigger at Arrow but the snow on the Peace is almost double that year.
TransGen
BC Hydro was a massive buyer over the weekend, surprising given their strong snow pack but apparently, the price was so cheap they had no choice. The DC was functionally full while the AC is derated for maintenance. Flows out of ZP heading south for several hours over the weekend to serve the season’s first cooling load.
Gas outages have picked up at all three ISO hubs.
Several new units came offline over the weekend, not nearly as many returned:
Gas noms remain weak, but are picking up in the south:
MidC still has gas units running, thanks to the spill:
Above is the extrapolated generating capacity (MW) by plant. Many big, and efficient, plants are offline, but the price remains high enough to support about 1300 aMW of gas. Let’s see if that holds as flows pickup and loads drop over the course of the week.
Conclusions
TRADERANK NOTE: – we discovered an error in our historical trade ranks over the weekend. Our current forecasts were good, but the historical reflected an Alpha release from several weeks ago. The Trade Rank historical data has been replaced over the weekend through November 2, 2016; we are currently running the Sep-Oct which should be live tomorrow.
- March
- The south has rallied well while the Northwest continues its descent into the nether regions of single digits. Not sure if March gets to single digits (at MId-C) given all of the spill, but it will take all of BPA’s market manipulation skills (and those are immense) to keep gas on the margin.
- SP – we’d be tempted to sell the rumor of the heat, it goes away next week, and hydro remains strong, but so does outages, and we are not ready just yet to relinquish our short at MidC
- LONG SP
- Palo has rallied harder than SP but has more load incrementally, plus a nuke outage looms.
- LONG PV
- MidC – at some point it becomes a buy, if it was cheap enough, we don’t think that time is just yet and want to watch river flows into Coulee this week, though the return to normal next week will rally loads. This is a weak short conviction and would probably be good with flat, too.
- SHORT MC
- SP – we’d be tempted to sell the rumor of the heat, it goes away next week, and hydro remains strong, but so does outages, and we are not ready just yet to relinquish our short at MidC
- The south has rallied well while the Northwest continues its descent into the nether regions of single digits. Not sure if March gets to single digits (at MId-C) given all of the spill, but it will take all of BPA’s market manipulation skills (and those are immense) to keep gas on the margin.
- April
- Like March, April has rallied in the south; most impressive is the PV off peak. SP is just back to the forecast, and we’d only own it as a hedge against Mid_C. That hub may have found a bottom, and maybe not. April (latter half) is poised to draft another 15-20 feet out of Coulee which may become problematic if the weather turns warm. The value of shorting MidC will be driven by March cash, right now BOM has gas on the margin and at some point the PROMP|BOM roll will look cheap. Again, nervous short here, but like the March, will play “trend is friend” for a few more days
- SHORT MidC
- Long SP
- Long PV
- Like March, April has rallied in the south; most impressive is the PV off peak. SP is just back to the forecast, and we’d only own it as a hedge against Mid_C. That hub may have found a bottom, and maybe not. April (latter half) is poised to draft another 15-20 feet out of Coulee which may become problematic if the weather turns warm. The value of shorting MidC will be driven by March cash, right now BOM has gas on the margin and at some point the PROMP|BOM roll will look cheap. Again, nervous short here, but like the March, will play “trend is friend” for a few more days
- May
- Our long South|North spreads have performed well, we’d not be imprudent to take profits, but we don’t think the all of the juice has been squeezed out. The Market is keeping Bridger|Colstrip running, we’re not sure that will happen, and the May will be set by what happens to April cash, which we fear. California’s hydro should begin dipping below hydraulic capacity, at least for a few plants, plus it still is cheap.
- SP – Long
- PV – Long
- MidC – Short
- Our long South|North spreads have performed well, we’d not be imprudent to take profits, but we don’t think the all of the juice has been squeezed out. The Market is keeping Bridger|Colstrip running, we’re not sure that will happen, and the May will be set by what happens to April cash, which we fear. California’s hydro should begin dipping below hydraulic capacity, at least for a few plants, plus it still is cheap.
- June
- Pick your poison, April, May, and June all have the potential to see single digit cash at MidC which will drive the spreads to $20+. It is only a matter of when that happens, can’t say now since no one knows what MidC temperatures will be. What we do know is that the odds of very warm northwest are higher in June than April or May. We also know this is the biggest water year since 1999 and when the melt starts it won’t stop in two weeks, like usual, but will impact several months.
- SP – Long
- Midc – Short
- Pick your poison, April, May, and June all have the potential to see single digit cash at MidC which will drive the spreads to $20+. It is only a matter of when that happens, can’t say now since no one knows what MidC temperatures will be. What we do know is that the odds of very warm northwest are higher in June than April or May. We also know this is the biggest water year since 1999 and when the melt starts it won’t stop in two weeks, like usual, but will impact several months.
- July
- All hubs are up, more off gas than anything else, but up nonetheless. We need to be short somewhere; we’ll be short here
- MidC – Short
- SP – Short
- PV – Short
- All hubs are up, more off gas than anything else, but up nonetheless. We need to be short somewhere; we’ll be short here