Good Morning,
Yes, we are glad it is Friday; we need the weekend to gather our wits and come up with a new plan to attack WECC term markets. The bizarre spilling behavior has shattered our confidence in a logical market, one that can be modeled, though we think BPA may soon find itself on the manipulation sidelines, a mere Participant, rather than the Director, of the market.
One market that has our attention is the June MidC:
From the lows of $12, it has rallied 25% to the relatively lofty $15s – way to go June, you da man! Or is it the man, maybe the RFC is the man, and Mr. Market is a herd-following dupe?
The above is the June STP in terms of energy for the last five weeks. The RFC has grown increasingly enamored of the back half of June, perhaps because they see 450,000 cfs flowing past their Portland offices. I guess they think they are seeing the June and July water flowing past and have cut flows accordingly. We believe they are wrong and we suspect Mr. Market was duped unwittingly by the RFC’s witless forecast.
Most of that 450,000 flowing past the NWRFC’s Portland office is the result of three months cumulative precip that was sitting on the sub-3000′ ground. Much of that low-level snow is gone, but has the upper-level snow also metastasized into water?
The above is a new dashboard and is useful for gauging where in the runoff the basins sit. One that is the throes of its runoff is the Tuolumne, that basin shed eight inches of SWE in a week. The Clark Fork and the Pend Oreille also lost SWE, but those losses were less than an inch, and the Flathead had a net build. West-side snow (WA Central) had builds. We bring this up merely to suggest that the Northwest runoff has hardly begun; all of this March Madness is mostly coming from the low-level melt; upper level hasn’t yet started. We’ll jump the Conclusion gun and SHORT June MidC.
Demand
A warm-up is in store across the WECC.
Phoenix returns to the 90s, its loads are poised to rally off current levels, and approach their peaks of a week ago. The outlook isn’t as hot as it was last week, but today is our first sign of the heat and those patterns often build, we’ll be watching this over the weekend. What is good for APS sucks for PACE; Utah loads will whither, so will PSC’s.
The Golden State will be golden, just not that bullish as its temperatures top out in the low 80s, 70s mostly at NP. These plots won’t help ISO length, at least in the off-peak. The on should see some late afternoon AC-driven spikes in SP, and even at NP in the eastern valleys.
Not a shred of bullishness in the Mid-C’s outlook; in fact, there are seeds of destruction scattered in these plots. Boise returns to mid-60s, even Spokane flirts with its first day in the 60s. A stalled melt (see below) will become unstuck and resume its inevitable march towards a colossal runoff.
Lots of red arrows, except for the Great Basin (PACE) which rallied off of a return to winter-like temperatures in Salt Lake. We already said that state of affairs is ending next week. We’d expect load rallies at PV, NM, SP, NP and load decays at UT, ID, MC, MT, and CO.
Hydro
Moving on to the fun fundy, the one that actually can swing massive net demand. Let’s start with the Precip Outlook:
California reverts dry, not that its rivers will be backing down; that warm weather will accelerate the melt, but at least there won’t be a lot of precip adding to the pain.
Check out Spokane’s 1.5″ of rain, arriving during warmish weather. The river with the same name may approach flood stage, or surpass, if the basin receives that much water. Normally the station will get about 25% of what drops in Seattle, in this forecast it receives more than 50%.
Arrow backed off, dropping its outflows in half; in fact, all of BC Hydro’s regulated projects are off, including the Peace. We doubt this is driven by a desire to husband a scarce resource; there is nothing scarce about British Columbia’s snow pack this year. More likely they looked at cash and said “no thanks.”
These non-corps stations are either sideways or dropping off, a result of the coolish weather this week. Should the warmer outlook stay, or even build, each of these will resume their upward sloping plots. Perhaps the Spokane is close to cresting, though we still think there is a shot at a 50k peak, the rest of them are not even close to WY17 highs. The Middle Columbia Sideflow Index is still barely registering, in fact, its basins have realized big builds over the last week; once it gets going, you can expect a peak north of 50k, perhaps 60-70k all of which drops into the Columbia below Coulee. Of course, 99.9% of that side flow water will be spilled; we watch it as we think it is the best gauge of “runoff.”
Regulated flows are mostly sideways with the exception of Libby which is now disgorging 25kcfs (up from 4k). Coulee is passing 170kcfs through its turbines all the while spilling nearly 40kcfs:
The project’s hydraulic capacity is around 210 kcfs; I guess BPA figures that extra 1500 MW would be the final nail in Mid-C’s coffin. It must be quite a show for those guys, dangling two hundred feet in the air, working on the spill gates. We wonder how much spill capacity the project has, given many of the gates are out for that maintenance. That answer to that question might become highly relevant shoud inflows increase (which we believe they will) and spill capacity is limited. Under that scneario another 40 kcfs will have to pass the dam via the penstocks, another 1500 MWs of energy that will provide one more kick into the long’s crotch.
Water Supply is becoming increasingly irrelevant, at least the Apr-Sep is, given that it is almost April. Most likely the 1-2″ of precip heading towards the Northwest interior will drive builds, and we’ll see these numbers pushed up, not that it matters. Even if the Corps ordered a deeper draft, it might be physically impossible to pull more water out what is already scheduled to be drafted. There are draft limits, like around 1.2′ per day, and taking Coulee to 1235 pretty much uses up that capacity. So an order to 1220 would be moot unless BPA is allowed to draft into the first two weeks of May, something that has never happened before. This may be the year to make that exception.
Let’s look closer at flood control:
The above is the plot of TDA, Apr-August, using a four-day moving average. Yesterday’s number came in at 115% of normal; big year, right? Now let’s see if there were any other years with a similar outlook going into the April Flood Control update:
One year was higher, 1999, the mother of all water years, and two were similar, though lower: 2011-12. Note the drafts for all three of those years – 1220.2. Contrast those targets with the March goal of 1235. We point this out as it has long been our contention that Coulee is being under-drafted this year. An under draft is bullish April, bearish June. In this particular year, the under-draft is easily 15′, all of which would be capacity to absorb June water.
TransGen
Nothing is happening in transmission or generation, as compared to Demand and Hydro.
Massive flows northbound out of ZP, significant cuts southbound on the DC, and the Northern Intertie merely reflects opportunistic buying and selling.
Outages are off across all three ISO hubs. The good news in this bad news is it will be hard to lose more incremental outages; a more likely scenario is to see outages increase.
We nominate noms as the worst performing metric in the WECC; SP15 hit a 13 month low yesterday. But like the gas outages, lows are more bullish than bearish, and there may only be one place for noms to go at SP – up.
Conclusions
We’re still on the sidelines, except that June MidC short. We will be rolling out a new version of TradeRank over the weekend and will hold off on a full market review until that body of work is completed.