Good Morning,

The weather cools in the northwest, even further out through the end of the month we see below normal. Tha weather will slow the melt and push water into June, and probably July, and will make refilling the northwest reservoirs easier. It will also make trading the Mid-C harder. Usually, there is something compelling to do this time of year, not this year. We would have preferred seeing Kalispell post some 80s for the rest of the month. Instead, we see the 50s.

All of the Northwest interior is cold for the next ten days, but its the 10-20 day that also draws our attention. Way to far out in a weather forecast to trade off of but still, the bold forecaster is predicting a 5-degree cold anomaly through the end of BOM. Worth watching.

California isn’t too hot, either, in fact, it is cold and has that same 10-20 day negative anomaly. The highlights of this dashboard are the low 60s for highs in Burbank, San Diego, and San Jose. Weather doesn’t get hot next week, either. Very bearish for the Golden Bear State.

The desert, on the other hand, returns to hot over the weekend and is currently expected to stay that way through all of next week. Short SP|PV anyone?

Actual loads reflect actual temperatures, what a shocker:

The Rockies loads are just sideways, just look at the Period Average plot versus the weekly …same line.

Poor Palo took a whipping, the hub’s loads plummetted 3000 MW, and APS ate almost 2k of that haircut. That will pass, the spots are clearing mid-20s but should boast a $30 handle next week.

Northwest loads are off a bit, but are already so low they can’t fall much further; in fact, the cooling trend will rally heating load some.

California, like PV, has seen its loads fall off a cliff, but unlike the latter, the state won’t see much of a rally next week, just too cold.

Palm Springs saw its week on week temps drop 30 degrees; Phoenix fell 25. Check out the Portland | Phoenix degree day swap – traded flat yesterday. Glad we sold that for size and now we’re rich and our business is an LLC so we won’t pay any tax.

Hydro

California is bone dry; the Northwest is projected to realize average precip which isn’t much this late in the year.

Most rivers in Cal have come off though every project is above hydraulic capacity, the state is flush with water, and there is still a lot of snow on the mountain.

Flows on the upper Kootenay have soared, up 400% from last week, which will make the refill at Libby that much easier. With the refill season underway and just a modestly positive snow anomaly, there shouldn’t be a lot of hydro surprises over the next six weeks. The big trade already happened, it was shorting everything, now that is gone and you need to carefully pick your battles. Rolls spreads, and other exotic derivatives are the tactic de jour.

Regulated mainstem is annoying. Coulee is back to being a neutered eunuch.

Any cycling on the plant is random, the lowest discharge hour yesterday was at 9:00 AM and with everything regulated we don’t see that changing, even with the cooling trend. The melt has started it just won’t accelerate, but snow will continue to trickle off the hill.

The Clark Fork and the Pend Oreille are mirrors of each other, both flowing at 60,000 CFS. Those numbers will grow, but not til June with the current weather forecast. Most of the other stations are off reflecting the cooling weather and will continue to fall next week.

Side flows crested and are starting to crash, they should drop further next week. The heat is gone, and snow will melt slower and put more downward pressure on June.

TransGen

Flows on the AC fell hard, down to around 2k driven off of TTC cuts. Even flows on the DC are off a bit, maybe reflecting weakening prices in the ISO? Flows out of ZP are now northbound also reflecting the soft market driven by low demand.

One bright spot for SP – gas outages have soared over the last couple of days, but NPs have come off some.

Lots of new outages and some big plants, too, and most of these are in SP. Just a few returned:

Finally, we have to say something about Col Gen Stn, after all, it was on the evening news. If Lester Holt is going to talk about one of my power plants, so shall I. A tunnel collapsed, inside the tunnel were barrels of radioactive waste. That entire Hanford site is a barrel of radioactive waste. The news made the news, but it didn’t affect how the plant is running, it’s still at 72%, but that too shall change as a refuel is imminent, like maybe next week. We’d not be surprised to see the plant go down over the weekend and stay down til the Fourth of July.

Conclusions

We ran from BOM on Monday and wussed out by covering that short with Prompt Length:

Market concurred, and the roll soared. Now what?

BOM
- MidC – we’re avoiding this hub like the Bubonic Plague. Cool weather is bullish, but it’s not cold, and the melt won’t stop. LL is dead and will stay dead.
- NP – we were long the spread
  - And it rallied some, but now we don’t see any reason to be long. Weather is growing cold and would prefer parking var for the time being
    - FLAT
- SP – that hub has a lot of outages and that’s the only good thing we can say about it
  - SHORT
- Palo – cold now, not cold next week, easy trade especially give the $3.00 sell off
  - LONG
June
- MidC – Cold May is Bearish June, but BPA has so many shaping bullets (spill, cut wind, push water into LL) we just don’t see any reason to sell it, nor will we buy it. The $2.00 LL we’ll keep on the books, not that we were particularly enamored with it, but at $2.00 where’s the downside? If you believe the STP then you’ll start seeing significant cuts in flows beginning around middle June:
  - - That suggests about 5000 aMW of energy potential lost from June 15 to July 1. You don’t need many days of $10 LL to score a double off of owning $2.00 June. How many days will it trade south of $2.00? Not sure, but June also has a higher probability of seeing sweltering weather – a few years back Portland sported 105s in June.
    - LONG LL
- SP – long off of roll
- Palo – long off next week’s heat and the impending cash rally