Good Morning,

We were somewhat struck by the cooling in the northwest and the rapid drafting of Coulee; so much so that our sentiment is to like owning some length in the BOM and May. The cooling in California has rendered us less enamored of being long the spreads and the 90s, and even the high 80s in Palo, coupled with the refuel, is interesting.

Demand

Let’s begin with that oven called Palo:

Even when Phoenix cools it still is in the mid-80s, and the city basks in a string of 90s. PV2 is at 97%; we suspect it goes offline this weekend, suggesting next week should see robust demand sans 1200 MW of baseload nuke. Probably good for LL as well as HL, more on that in the Conclusions.

Can’t say the same about the Kally; she struggles to realize normal and mostly fails at that. This week’s mini-load rally is falling by the wayside, so will prices, most likely. The rain today and tomorrow will back off the solar, but then it goes dry. Sunny and cold, a recipe for heartburn for bom length.

Forget posting Max, Min at MidC is more interesting. Kalispell is mostly below freezing for the next few weeks; Spokane is barely above freezing. Seattle and Portland look more like a late February forecast than a mid-April. Natural river flows will naturally stop flowing, well maybe not stop, but they will slow down. Sometimes you just have to bite the bullet and accept the cards you have, not the ones you want. Gramma called that making lemonade from lemons; you might call it a reversal from Short to Long, we might too.

Northwest loads fell off of mild temperatures, California rallied off of warm (90 in Palm Springs), Palo rallied up a bit, too, and will rally (or hold) for next week.

Red is bullish down south, bearish up north. Next week the circles will be blue in Kal and the PNW and remain red in Palo.

Hydro

2.5″ of rain heading NP’s way, we already see some of the rivers rally off of the recent precip:

They’ll rally more when we post on Monday; note the Pit is down to 3500; just when they finally work through the WY17 storms, another one hits. It will take months for the state to work through its hydro hangover, snowpack is off the charts:

Those levels, SWE depth, will spill into July and have a bearish pall over Q3. The Northwest has a lot of snow, too, especially the Upper Snake, but the cool weather is going to keep the snow on the hill; people will be skiing through June at those resorts bold enough to stay open.

It isn’t dry in the Northwest, still seeing 1″ in the Upper Columbia, most of which will come down as snow. The snow that will melt in June and July, none of that will impact April-May.

Columbia River inflows to Lake Roosevelt are off 20kcfs, and inflows from the Spokane are off 15 kcfs:

That is 40kcfs BPA doesn’t have to pass while it drafts Coulee, and it is drafting fast:

Eleven feet in two weeks, the next eleven is even easier given the “V” shape of the reservoir. Assuming a 1225′ target, this could easily be achieved by the end of April, especially if natural river flows continue to abate, which the cooler weather suggests they will. Perhaps BPA can back down its QG from Coulee?

We saw a blip from a few hours ago and wouldn’t be surprised to see the project drop to 160 kcfs next week. BON turbine discharge is off 50kcfs from last week:

We simply see the wind down of the Great WY17 First Freshet; the melting of three months cumulation of low-level snow; that snow is gone, now its just a normal big winter with significant snow at high elevation waiting for big heat that isn’t here, yet. Bullets are being returned to BPA, she is loading up her Cruise Missiles and is ready to strike you Syrian Shorts.

I posted the Water Supply because this is the time of the year where we turn off our forecast and go 100% with the RFC. Neither forecast (RFC or Ansergy) is changing much, and the STP is now publishing numbers into August. The water year, in other words, is a lock and the only remaining variable is Timing. As in, when does the snow melt? That isn’t a water supply variable, so we’ll be shutting down our snow-driven flow forecasts this weekend.

TransGen

Gas Noms are worthy of a look:

To highlight how awful it is to be a gas generator we drew a “red line” from today to 13 months back; nearly every hub is at its 13 month low.

Still big gas outages in the ISO which explains much of that big HA rally from a few days back:

A few new units are offline, and a few fewer returned:

The problem with bullish phenomenon is the next state is usually bearish; big outages are often followed by either normal outages or small outages.

BPA updated its AC plans yesterday; it looks like all of the Q2 is confirmed derated. Incrementally, from what is happening today, there really isn’t any change:

The AC is filled at 3k, so is the DC. Powerex is swinging its swing option called Northern Intertie around 2500 MW adding to the excitement of MidC realtime. I wonder what a Border Tax would do to that line’s loadings?

Conclusions

April
- - MidC – we’re fading our forecast and buying back anything we have short there; most of it from spreads. Our thinking is a tightening in nat river flows, more heating load, and BPA backing off its rate of the draft.
    - LONG
  - SP15 – cooling down, rivers are full, gas outages are as high as you’ll see
    - SHORT – in other words, we are going to sell the spread:
      - This may seem contrary to the forecast, it is, but we believe that the forecasted water in April will be backed down in next Monday’s STP; plus the demand spread will swing 3000 MW to MidC’s favor.
  - Palo – the dang desert doesn’t drop, it holds or builds in temperature and loads will follow and PV2 is going to go down and …
    - LONG , call it a long spread to SP
May
- - Where goeth cash, goeth prompt … Proverbs 11:21
    - If we are right about cash tightening at MidC we can’t stay short, and if BPA can get Lake Roosevelt to its target by the end of April that leaves all of May to refill; a dramatic swing from drafting a foot a day to adding a foot a day.
  - SP – same logic, sell the bearish outlook for next week and short the spread
    - Short
  - Palo – LONG , same logic
Jun
- - Can’t be long June MidC in this kind of water year, especially since y’all just jacked it up over the last week. Call it a short June-May roll
    - SHORT
- SP – still long the spread
- Palo – long off of that April bullish noise, get a Prompt+1 free rider effect
July
- The market has rallied up all July’s; we’ll short MidC off of monster snow, all melt being deferred to June-July.

BONUS CHARTS

We just added some new dashboards: Q rolls, both Q to Q and YOY Qs. A few of the plots caught our eye:

Q to Q Rolls:

Q318 to Q218 is near a contract low.

Palo has several Rolls at contract highs and lows.

NP15 Q3 to Q2 was a dream trade a week ago, probably still safe to buy that (note the forecast didn’t budge, the market pummelled itself off of 17 cash).