Just Another Day

Good Morning,

Just another day in the WECC that brings more bizarreness.  While we are witnessing six-year high discharge on the lower Columbia at the same time we see a strong rally in the Mid-C dailies and most of the efficient gas were units fired up:

The above reflects the maximum discharge (QR) at Bonneville Dam for the month of March by year. In the old paradigm, we’d expect cash to be battered, at these levels, bids become scarce and typically come with a single digit, but that’s not the case. Cash is clearing near $20, and most of the efficient gas turbines in the Mid-C are running:

In 2015, with half the water, there was a quarter of the nominations. Just another day in the WECC, it never fails to strike wonder.

Demand

Mid-C

Maybe some of the Mid-C’s strength can be explained by cooler temperatures – loads have rallied a bit. Let’s examine the utilities actual loads over the last couple weeks:

Most BAs are up, except for Idaho Power which is enjoying balmy 60s; the load center Balancing Authorities all experienced rallies over last week. The weather outlook doesn’t look much different, perhaps a touch cooler:

There are not a lot of anomalies in the fourteen-day outlook, just slightly below normal.

California

We see a different story in the Golden State; a story of declining loads driven by declining temperatures. It isn’t in the high 80s in LA this week, it is a pleasant 70ish, and all of the SP15 BAs saw load decay. The northern Utes were mostly sideways, and like the Mid-C, there is nothing in the current forecast to suggest that will change:

A very cool outlook, a very bearish outlook for NP and SP. But what else should you expect, it’s March, not July.

WECC Interior

The Southwest has been a baking oven, at least hot for March, and the Ute’s loads rallied hard. Those warm anomalies haven’t worked out so well for PacEast; their loads are off as HDDs pretty much disappeared. But what goes up usually comes down and so shall temperatures:

Expect sharp demand declines as the desert reverts to normal; loads in AZ and Nevada will mostly drop while Colorado and Utah should see sharp rallies.

We have a few observations on actual temperatures:

  • The interior heat spilled north into Boise and Billings – that only brings faster snowmelt and lower loads
  • The Mid-C minimum temperatures have been downright chilly which has driven those spikes we saw in the BA Load plots.
  • Phoenix has set near-records with temperatures in the 90s; Vegas even touched 90.

TransGen

What the ISO giveth it also taketh, and it has taken away about half of its gas outages:

Those returning units were partially offset by some new outages:

The net effect is bearish; more units are available to serve those declining loads:

Palo’s gas noms have been strong for March:

Though we note Gila River is still slumbering – is that bankruptcy related?

Noms in the Great Basin are off from prior years while the Rockies are about the same.

Not much to say about flows; we’re surprised to see Powerex buying high-priced MidC cash; we’d expect them to be big sellers.

Hydro

This has been one exciting water year; in both California and the Northwest. We have a lot to say on this fundy, let’s start with the rivers.

Flows out of Arrow are strong, these rallied from around 20kcsf to over 80kcfs.  We also take note of the total flows at the border, these are now north of 100k, all heading into that big run of the river plant named Grand Coulee.

Mid-C gets two river tables; we like to break up the rivers into Corps (regulated) and non-Corps (less regulated). The above are six major Corps projects. A few observations:

  • Coulee is now averaging about 165kcfs through its turbines; also note it has lost the ability to shape energy
    • In past days the plant would swing about 60kcfs from min to max, now it is lucky if it can swing 5kcfs. There is just too much water coming and no place to put it, other than through the penstocks and a small amount over the drum gates (20kcfs latest hour)
  • Big spill at Priest, now about 100k, and they are even spilling at Albeni Falls (30kcfs)
  • For a good laugh, look at Ice Harbor – Spilling 150kcfs and running 50kcfs through the turbines. That is a project that has about 100kcfs of hydraulic capacity.

The above plots are our other Mid-C grouping -these are the projects not controlled by BPA. The Pend Oreille and Spokane together are adding about 100kcfs to Coulee’s inflows; these two collectively are up about 70kcfs in the last week. Several stations are posting declines driven off of the cooler weather.

California sees some rivers rally hard while the mainstem Sacramento and San Joaquin are still declining.  The former reflects the snow melt, the latter the tail end of the previous storms. It looks like the state is drying out:

Less than an inch over the next ten days that is laughable for the state after the endless deluges they enjoyed this year. The Mid-C is wetter …

That 1.4 inches in Spokane is a lot and with a cooler temperature forecast most will come down as snow -a big water year will get bigger, but what does that matter when the federal government spills just enough water to keep gas on the margin. It’s perhaps a new world out there.

We won’t bore you with the spill charts, check them out yourself, just know they are big. We will bore you with the RFC’s ten day, it got bigger …lol

Wow, look at those five-day deltas. But does it matter? If all the incremental water is spilled than it doesn’t matter. What ever happened to the Nitrogen issue?

Conclusions

We don’t buy this new world, we don’t think BPA will spill the entire WY17, and we don’t think gas will be on the margin throughout this runoff. There will come a time when the ute gives up, and the hub trades single digits, but we doubt we see that in March, maybe in April.

  • BOM

I’ve always believed you wanted to shape your book to look like BPA; this year that has never been more true. BPA is very long “potential” energy and has a pecuniary interest in keeping gas on the margin and is willing to dump “fuel” to keep it so. How long can they play that game? Or how long do they want to play that game? At some point they might want to start buying Q3 and Q4, that is when they will probably push more water through the penstocks.

For now, we are going to flatten out everything and watch.