Good Morning,

We saw the weak cash prices posted on Friday and saw the market pummel the BOM. Perhaps BPA’s iron grip on where Mid-C gets to trade is weakening; the mounting inflows may have surmounted their many means of manipulating markets. Oh, my!

What is most telling in this chart is the rally in cash last week; from ten to twenty all the while inflows were increasing. But worry not, as long as there are spill gates more water doesn’t mean much when it doesn’t move through the penstocks (more on this in a later post this week).

We do believe it will grow ever harder to keep gas on the margin, to keep cash trading in the mid-teens, because the Northwest is going to grow warmer, materially, and inflows will begin to climb again.

Demand

It is not just the Northwest that grows warmer; Phoenix returns to the 90s; in fact, we saw the heat build from Friday. Like we said last week, good for APS/SRP; bad for PACE – load-wise, that is.

The Golden State will bask in the golden sunshine for the foreseeable future and temperatures rally enough to bring on some AC load; not like we saw when Burbank was in the 90s, but there will be a pop from current loads; after all, temperatures rally nearly twenty degrees.

MidC gets warmer, but that is only bearish. Loads will fall, streamflows will rise, and BPA will spill even more water. Oh, my!

Loads are ugly, especially at Palo Verde where they have dropped 2700 MW in a week. Loads have fallen at every hub, but that will change given the warm up.

Burbank’s high, 68, is the degree day pivot point meaning no degree days, at least on that hour. Just goes to show how bearish it is in Cal.  Kalispell has been below freezing at night and is endemic of temperatures throughout the Upper Columbia and is the reason most rivers have suspended their volume ascensions; that too shall pass with warmer temperatures. Phoenix dropped into the low 80s and its loads cratered, a nice reference point for the next month.

Hydro

California goes dry; with the warm up, the only change in streamflows will be snowmelt-driven.

The Northwest isn’t exactly wet, but it’s not dry, either. Most stations are expected to receive normal precip; we think that is bearish given that rain tends to exacerbate melt.

The above table is a sanity check on where we are at with this year’s runoff – we aren’t anywhere; it hasn’t even begun per upper-level SWE. The Northwest either had small builds or small drops, but nothing that suggests upper-level snow has even started to think about migrating to the Pacific. Even the Sierra’s had week on week builds. This massive surge we see in Northwest flows are the low-level snow we have been chirping about for the last two months.

The last minutes posted on the TMT had some interesting comments:

“Julie Ammann explained current system operations. She noted that the Corps has declared a system-wide flood emergency due to the flood stage forecast at Vancouver. This requires that the Corps call on the Districts to help manage flows in the upper basin to alleviate flows in the lower basin.”

This was posted 15 days ago; it’s only gotten worse since.

“Steve Rogers, DWR Hatchery, reported on fish health. They are currently starting to smolt, however, are not up to size for release. From a sample of 10 fish in the raceway, 9 had bubbles in the gills, 6 in the midline, and 1 in the caudal fin. Of 10 steelhead sampled, 4 had bubbles in the gills and 2 in the dorsal and caudal fins. In summary, gas problems are increasing in the number of fish, the location, and the level of bubbles. “

Ironically, we may see less spill during “spill season” than we’ve seen in March since the smolt will begin their quest for the Pacific sometime soon and spill-induced bubbles are on the feds radar screen.

California rivers are a mixed bag; some up, some down. We suspect the downs are from a cooling in the upper-level Sierras while the mid-elevations never dropped below freezing. With the warmer weather coming most stations will see a melt-induced surge.

The Cheakamus is rallying while Ft Steele (Kootenai) falls reflecting the cold weather in the Rockies and the mild weather on the western slopes. Flows into Lake Roosevelt have suspended their rally, now are mired just north of 100k.

Non-Corps stations are mostly off due to cooler weather, and perhaps much of the low-level snow is gone. The Spokane has plateaued at 40k, but with a full Lake Coeur d’Alene and warmer weather, we believe that station will approach 50k. The Pend Oreille will follow suit, though that much bigger river may peak at 100k before all is said and done.

Flows out of Coulee have held steady at 180k (through the penstocks) which is remarkable, probably the highest in the last ten years for March. Note the discrepancy between the Int Border + Spokane; there are about 20-30k additional outflows:

Reservoir – they pulled a couple of feet out of Coulee. Apparently, they anticipate a deeper draft and are prepping. Given the TMT flood comments (See above) one can only imagine BPA’s consternation. Not only are they worried about dollars, now they must focus on keeping their offices from floating away.

Sometimes it is good practice to step back and summarize the year in a table; the above does that nicely in that it shows Water year to date cumulative precip. Note the astounding totals at Lake Tahoe; those numbers look more like what is received in a rain forest.  The table also highlights the changes over the last week, nearly everywhere had builds, and more builds are coming this week. Oh, my.

TransGen

The Northwest is exporting to anyone that will take its energy; California is taking about 5000 MWs, and BC has shown some bids; incrementally this is bearish should any fundamental change should drive Net Demand down. Wait, net demand is going down via declining loads and increasing stream flows. Oh, my.

Great timing BPA, cut the AC some more. Oh, my.

Gas noms are remarkable because they are at 12-month lows at almost every hub.

SP had a slight resurgence in new outages while NP and ZP didn’t.

Six new units taken down for whatever reason, doubt it matters given the tenuous place SP15 finds itself in the stack.

It will take about 5000 MW of new Net Demand before SP finds itself at a solid bullish inflection point; a few new gas outages today doesn’t matter much. Makes for good blog fodder, nothing else

SP (with ZP added) solar crested twice at 7900 MWs; we will be reviewing our stack and adding in some new units that are missing.

Conclusions

We’re done with March and suspect you are too. Was an interesting product and would have been more interesting if BPA hadn’t cheated.

• April

  • 
    • We’re re-running history and will be adding another 90 days to it later today or tomorrow, but for now, you can get the picture.
      • SP – Market and forecast are at relative parity, we like the warming trend and hate the solar; since the DC is already full the hub won’t feel any of MidC’s incremental pain, except via that infinite “Virtual Transmission Line.”
        • Long – the spread to MidC
        • We also noted the pounding the LL has taken of late, and like it given that we backed the truck up on the on/offs a few weeks ago:
          • 
          • Most have soared which sours us on holding this any longer, in fact, given the precarious position in the stack and the ever-increasing solar capacity we are
            • SHORT THE ON: OFF (which virtually makes us long SP LL and short MIDC HL)
      • Palo – the nuke’s coming down, and loads are going up
        • Long the HL
  • 

• May –

• `SP has been on a roll, why? Even MidC has rallied
  • PV – Long HL
  • SP – Short HL
  • MidC – Short HL
• June
  • 
    • Big water year and runoff hasn’t begun (upper elevation)
      • Short June MidC On: Off
    • SP
      • 
        • Check out the June-May; why the crash. With this very warm weather, we expect runoff to be fading at several of the stations by June
          • LONG June: May SP HL roll