Good Morning,

We’ve proven optional spill, now let’s look at how BPA dispatches its wind resources:

In this table, we took an average, by hour, for last week’s wind energy, per BPA, and compared to average hourly wind speeds at Arlington, OR (on the Columbia River, just above The Dalles). We map about 4000 MW of capacity to Arlington and is arguably the best single station indicator of Mid-C wind speeds. A couple of observations…

The correlation, this week, of wind speed to wind energy is a negative; the R-value = -.42; in other words wind speed and BPA wind energy are inversely correlated.
The highest wind speeds occur during the on peak hours from 13-18; these also are the lowest production hours
BPA is apparently dispatching its wind to support prices
Ansergy fails to model manipulative market behavior correctly and, consequently, misses badly in BOM MidC. Bad Ansergy for not modeling Bad BPA correctly!
- That will change, we are adjusting our models to layer in a new fundamental – MMB (“Market Manipulative Behavior”).

For those BPA cheerleaders out there, you’ll say they have to drop the wind because of the big hydro for voltage support, or VAR support, or whatever other arcane electric physics phenom comes to mind. We won’t dispute the physics of electricity with an electrical engineer, way beyond our pay grade, but we will ask you cheerleaders why those activities are not happening in the off-peak hours more than the on-peak? Those are the hours where the wind would affect the grid the greatest. Rant over, on to fundies that are driven by fundies, not profits.

Demand

Get out the SP50 (as in sun tan lotion) the desert is getting hot. Today’s forecast is 3-4 degrees warmer for next week than Wednesday’s. If Palo doesn’t have its thermals back, it may set a season high for cash. We’d expect all the quality gas plants to be generating when the city hits 103, given a nuke is out.

Cally is warm, too, especially so at NP15. Check out the 90 handle at Sacto and the mid-80s in sunny San Jose. With a Diablo unit down for refuel, we think this will make an excellent test for cash next week. These temps will also unleash a torrent of melt in the Sierras.

That frozen stretch of tundra known as the Mid-C is warming up, the glaciers are retreating towards Canada, and loads will melt just like the snow above 4000′. Today is a very bearish forecast for that hub and will probably signal the official start of the MidC runoff (see HYDRO).

Temperatures are notable because there isn’t a lot going on, meaning the delta from this week to next will be dramatic.

Loads are mostly bearish across the traded hubs; only NP saw an increase, but this report will look much different next week.

Hydro

We’ll combine the Precip outlooks into one table because they are identical for both the PNW and Cal – Very Dry. Today’s Precip Outlook is the first forecast for MidC that hasn’t been wet in months and perhaps suggests a change in weather, finally.

Hey, here’s your single bullish MidC nugget – the RFC has backed off its 10-day energy outlook by 1400 aMW from today versus May 3. That is still a wall of water to manage; just the wall is lower.

Cal Rivers are a mix; Shasta is cutting its spill, its draft is ending. Most of these gauges will be rallying next week off of accelerating melt, we suspect.

BC Hydro’s system is mostly up, some notably, like flows at Duncan and Ft Steele, indicative of melt occurring. Better indicators are our Side Flow Indexes:

These are up sharply, and it isn’t even warm, yet. Our favorite, the Middle Columbia Index (Wenatchee, Methow, Entiat, Chelan) will peak around 50,000 cfs; it’s only at 15000 today. We also added a new one, the Kootenai Side Flow Index which measures flows between Libby and Bonners Ferry:

This index has just begun to tick up and will crest around 30000 when runoff in the Northern Rockies peaks.

Regulated flows on the mainstems are uneventful, pretty much running as if they were regulated. We noted there is finally some shaping going on at Coulee:

And all three peak hours were occurring on Peak Hours, while two of the three trough hours happened during Off Peak Hours. There is still way too much water going into the reservoir to allow for much shaping, and even more inflows will start hitting Roosevelt late next week.

The unregulated projects are mostly up; even the Spokane has bounced up after five weeks of decline. Watch these gauges closely late next week; the warm weather should have them spiking upwards and putting more downward pressure on the MidC prices.

Check out the unshaped exports on both the DC and Northern Interties. We haven’t seen that strong of exports on the DC for a long time, and even the off-peak hours aren’t backed down. If BC weren’t buying the MidC would be in a world of hurt. If the Colvile’s hadn’t requested a suspension of the draft more hurt would be realized.

Conclusions

May
- - MidC – we want to short the HL as we see loads declining (not a lot, but some) and inflows rallying. However, the effect of warm weather won’t be felt until well into next week, but if you don’t jump early, you may miss the train. Bear in mind, shorting May HL means you are fading BPA, a mighty beast that misbehaves and has a vested interested in seeing gas stay on the margin. That said, there will come the point where they can’t control things
    - HL – SHORT
    - LL – LONG – we’re long this off the ON|OFF, mainly because the off is so cheap and there are signs of shaping but don’t like OFF that much
  - Palo – can’t not buy Palo given the first string of days over 100
    - HL – long
    - LL – short; we think all of that gas that will be needed during daylight hours will min run at night and crush the light load market
  - NP15 – first real heat, loads should spike up 2000-3000 MW
    - HL – long
    - LL – long
  - SP15 – decent heat, but not even a CY high
    - HL – Short, we’ll be buying the NP SP spread
    - LL – Short, fear the PV LL market tanking
June – we’ll attack from the rolls
- - MidC – If BPA starts refilling Coulee next week we will switch our short from May to June, we’ll be watching that; if they don’t, and they usually don’t the first week of May, we’d buy the roll
    - HL – long
    - LL – long
  - Palo – the roll is cheap, but in the face of 103 degrees next week and the Palo nuke offline, we think it might get cheaper
    - HL – short
    - LL – no position
  - NP – if cash rallies at NP it will rally the June
    - HL – long
    - LL – long
  - SP – the roll is dirt cheap
    - HL – long
July