Memorial Melt Down

Good Morning,

Memorial heat heats up in the Northwest around Memorial Day and should trigger Peak Runoff by month’s end.

Not only will snow melt, the ACs are getting turned on, especially in Portland where temperatures are projected to breach 90 for the first time since early September. We perceive this event as a net bullish for MidC BOM as it takes several days after the heat before we see an uptick in river flows. While we wait for the melted snow to reach production we’ll see I-5 loads rally. Note also these hot days fall next week, just before the holidays, suggesting peak flows occur over the holiday weekend. Some of this will “spill” into June but it will knock SWE down a lot:

Perhaps by half, but that still leaves ample SWE remaining to keep the lid on  June.

Cal’s heating up too but Burbank is projected to post a 7 degree cooler day than Portland, even Spokane has almost the same high as Burbank. San Jose is warmer than LA suggesting this latest heat wave will have more impact on NP than SP.

That is a long string of 100 degree days in Palo, but that 109 degree lotto ticket was torn up and replaced with a low 90, confirmation that days > 10 are unreliable.

Loads are weak everywhere, but weakest at Palo with its 3k week on week drop.

Dropped because its cool, so cool Sacramento and Phoenix posted the same high yesterday.

Hydro

We’ll lead off our Hydro reports with reservoirs, not because they moved, but because they DIDN”T move. Both Coulee and Horse didn’t fill over the last couple of days which is interesting and suggests BPA is not too worried about getting full by the Fourth. Perhaps they see next week’s heat and know there is ample water heading their way. So does this mean BPA can start cycling Coulee?

Perhaps they can, but they didn’t as the plant ran flat for the last two days though it did cut QG by 14kcfs. So inflows were strong, about 200 kcfs at the border and the project terminated its refill regime.  How’s that math work? Strong inflows, cut discharge through the turbines, and don’t refill?

Where there’s a will there is a way, or said slightly differently, where there’s a spillgate there’s a way. BPA opted to let the water pour over the top; perhaps they wanted to test out their shiny new drum gates? Clearly they didn’t want that nasty water going through the turbines.

Note the flows at the USA|Canadian border – steady 200kcfs. That will grow by the long weekend, perhaps approaching 300kcfs?

Natural river flows are falling hard off of the cooler weather and will reverse themselves, the question to ask is whether the hottest day in WY17 will also drive a new peak? We think so, there is still ample snow left, just how much snow will be left after the 80s is Kalispell is what we want to see.

The Lower Snake sideflows are in a free fall, but careful you don’t technically trade that chart, the trend is not your friend, we think new highs will be set by the end of May.

A few comments on Cal rivers:

  • The Pit is swinging hard, we wish GCL was doing the same
  • All projects, aside from the Regulated and Pit, are off
  • Let’s see how much rally they get off of mid 70s in Lake Tahoe, if not much than we have confirmation peak water in Cal was realized weeks ago.

Northwest precip forecast looks like Cal forecast – nada, nothing, dry. A new weather pattern appears to have taken hold of the WECC, the cold/wet of WY17 is over.

TransGen

A new reality has established itself on the south-bound lines – they are cycling hard and following price inside the ISO; these lines were baseloaded for the last eight weeks, now they look like they usually look. BCH sold hard into the MidC in front of this warm event, probably thinking prices will take a tumble though we think next week will be strong BOM.

Both NP and SP saw gas nom rallies, sharp rallies, while MidC is on a nice upward sloping trend and Palo fell in sympathy with ambient air temps.

Gas outages in the ISO are off hard from a week ago

Conclusions

  • BOM
    • May MidC Heat Rate is now approaching 9k
        • We’ll fade that move, despite Portland at 90. Too much idle gas below where that heat rate is clearing,
          • That is close to 3000 MW of gas NOT running today, do you really think most of those units will be needed? Fading that chart is a bold move, but we think BOM MidC is on an irrational rally, but given an irrational BPA maybe its not, still we are …
            • SHORTING HL Heat rate
      • NP & SP
        • Long NP|SP off of stronger NP demand forecast relative to  SP
    • Palo – she’s on a tear, too
        • But at least PV will have the load to support that heat rate
            • By the 4th or 5th day of this extended heat the hub will be scrambling to serve demand, given the residual heat impact on load.
              • LONG
    • June
      • The rolls say it best:
          • These are at perhaps all-time highs, in any year, May over. We don’t really see the fundies to support this and will fade them all and go long, June over.