Hundo

Posted on by William Griswold

Good Morning,

A cooling trend in the Northwest is set to delay the long-awaited runoff while heat in the desert is poised to post the first long-awaited day over 100 degrees – in Phoenix. Burbank boasts a day in the 90s. Cooler weather in the northwest is bullish, hotter weather in the southwest is bullish; bullish is bullish.

Demand

Phoenix is set to bust the century mark and record a triple digit day; that will only add fuel to a burning PV market:

Those aren’t bad heat rates in July; it’s April. April 19, to be exact, leaving 11 days til May, but the market hates May, loves April:

A mirror image of BOM, the roll that is. Hhhhmmmmmmmmmmmmmmm…. and why do you suppose the above is the reality? A few theories to support the market price (for the roll):

  1. Massive coal (and gas) outages that all will return at 11:59:59 pm on April 30th.
  2. Ice Age-like cold outlook in the 12-42 day Palo forecast
  3. Nuke gets refueled in 20 days, sets the gold standard for refueling speed as the rest of the world looks on in awe ..and shock.
  4. Solar City rolls out 10,000 MW of Phoenix rooftop solar as part of its May Day celebrations. Elon Musk rejoices by launching the entire APS Real Time team into space.

Burbank and the LA Basin join the heat party, for a day. The California outlook is a head fake, one or two days of heat than an extended outlook of normal to below even that.

Northwest joins Nome in celebrating an extended winter, now into May. This forecast pretty much assures that the Coulee draft targets will easily be met as there will be no early runoff, at least in April. It also means that evening loads will remain relatively strong into the first week of May. We still like owning that Light Load, even though the market hates it:

We think there are a few fundamentals to support our seemingly misplaced enthusiasm:

  1. Draft to Refill Reversal – this will be as much as an 80 kcfs swing in average discharge out of Coulee, or about 40% from current levels. It might take a week before BPA begins refilling, but looks like there won’t be big inflows.
  2. Shaping – more than net discharge, we think BPA may start swinging the project as it loses the “run of river” label.

Even if they don’t shape,  the cuts to off-peak water will be equal to the draft; we think it might be even more.

Hydro

We haven’t posted this report because it was so predictable. Beginning in early February, the RFC raised the ten day over the STP every day. Now check it out; 10 Day < STP. A Brave New World we are poised to step into.

Cally is dry, the Northwest is more normal, though the projected precip in western Montana is a positive anomaly. Couple that 1.2″ at Kalispell with a 10 degree below normal temperature outlook and you get an SWE build into early May. Bodes badly for sometime, but not the first week or two of May.

Most rivers in Cal are up off of the warming weather which is melting the snow. We saw a headline last night that caught our eye:

Looks like fun.

Most rivers are off; the regulated Pend Oreille is sideways.

The regulated mainstems are sideways, it’s regulated and cold leaving no surprises to surprise BPA.

Side flows are appropriately named, they are sideways. We’re now in the campfire scenario where Cookie says it’s too quiet out there, and a moment later the Apaches scalp the Cowboys. In our world, warm weather is the Apaches, and anyone long is the cowboy. Moments are weeks, not days, it will remain “too quiet” for a few more weeks, but at some point, a war party is set to disrupt this spring bull market.

TransGen

The AC is now an exporting machine and is remarkable for how flat the line is. In fact, the AC plot looks like the GCL QG, maybe because they are one and the same. Flows out of ZP have tanked and flows on the DC are so predictable you could set the Nuclear Clock off of them.

Signs of life in the Gas Nom auguries. Upticks everywhere except Palo and the Colorado. Does Emperor wear no clothes?

ISO Outages saw more returns than new outages – it’s that time of year where the ISO must start thinking about summer and gettings its ducks in a row and getting its units back.

Conclusions

We think BOM needs to be viewed as a Roll:

And Contract Lows catch our eye and start our salivation process:

We’re buying the following rolls:

  • SP HL
  • SP LL
  • Palo HL
  • Palo LL

The Mid-C doesn’t leap off the page as  buys or sells, but we’re going to buy those as well:

  • Mid-C HL
  • MidC LL