Good Morning,

Long and lovely weekend in the Northwest, perhaps the nicest Memorial Day weekend I’ve witnessed. Bellevue was often too hot for most Northwesterner’s taste, though the rest of the country would just laugh — it was but 80 degrees. The market didn’t find anything to get overly hot and bothered over:

Yesterday saw a quick pop then just as quickly retreated into the mire of mid to low 20s:

It seems there was too much gen on HE 9 yesterday, HA settled deep into the negatives, while the ramp out of solar saw some triple digits, at least everywhere but AZPS. Interesting that the Northwest (measured by the BPAT node) hung tight with the ISO. After all, this was Memorial Day weekend on what most certainly will be the highest streamflows we’ll see in the Northwest until next spring. Bear party is all over, all that’s left is either the crying or check cashing.

Demand

One significant bearish driver this weekend were the miserly loads realized across all traded hubs. They were all off at least 2000 peak MWs from last weekend and SP was down over 4000!. Temperatures, of course, were to blame:

Both Burbank and Sacramento were off over ten degrees; the desert was more flat than off, and the Northwest was cooler on the coast and warm in the interior. Looking forward, there is little respite for length:

The desert isn’t cold, it’s quite warm in fact, but that is just normal. What you see is what you get, load-wise, all of which renders Palo reasonably safe for length (if only it was cheap!). We doubt you see big load swings over the next two weeks given the above forecasts.

California, on the other hand, is poised to grow uncomfortably chilly for a few days this week. Later in the week, Sacramento gets hot, Burbank just warm. In sum, June is coming in like a lamb then showing hints of morphing to a lion next week.

The Northwest interior remains hot today and mostly above normal for the duration of the forecasts. As mentioned already, peak water is in the history books, from here til the end of WY17 the region’s flows will drop every day.

Hydro

The River Forecast Center’s Ten Day is more bearish than not; the front has a bump (versus last Monday’s STP) while the same is seen in the back. Perhaps a “tell” on today’s STP, a bearish “tell,” at least for BOM. We’d expect the first ten days to be bearish, but at some point in the 120 day, there has to come haircuts off of the positive temperature anomalies realized since last week.

A couple of the side flow indexes posted six-year highs yesterday including the Middle Columbia. All indexes will start falling later this week and not see these levels until perhaps next year – the region is just running low on snow:

Both the Clark Fork and Pend Oreille basins lost about 25% of their snow over the last two weeks. The Salmon and Lower Snake basins lost over half and even snowy California is seeing its big water year melt away; now over half of our reported basins in the Golden State are below ten inches.

And just about half of the Ansergy California stations are posting average flows; the other half realize six-year highs.

BC saw some big surges on their mostly unregulated projects, like the Cheakamus and Kootenai. Even Mica posted a six-year high. It’s refill season, and there is a lot of water to get parked before the next US holiday, the Fourth of July:

Coulee has 35′ to go, but check out the energy production on the plant over the weekend. Both Sunday and Monday averaged over 200kcfs through the turbines all the while adding over a foot a day to the pond. Also worth pointing out the project enjoyed some mini-shaping – yesterday BPA cut flows on HE5! Contrast weekend operations with last week, every hour on the latter was about the same. Perhaps there is light at the end of the light load tunnel?

Endemic of the disappearing snow is the Spokane River where that basin saw 90 degrees over the weekend and flows dropped. The Clark Fork/Pend Oreille system saw week on week flows pick up but there were a few that went sideways.

TransGen

BC is swinging its system nicely; a 3500 MW turn from buy to sell yesterday. The AC is starting to shape exports, but the DC is even more aggressively shaping out of the solar ramp, which, to us, is a sign of bullishness.

Gas outages in the ISO are not a sign of bullishness, these have collectively fallen about 5000 MW from ten days back.

All of which means more units are returning (above) then tripping (below).

Gas Noms confirm all of the above:

Palo and MIdC saw season highs while the ISO tanked.

Conclusions

June
- - Nothing is cheap which makes us leery of length, especially given the front of this month is neutral (PV, MidC) to bearish (all of the ISO). That said, there is heat heading towards the NP interior and its hydro is falling.
    - Mid-C – we’ll stay short the On|Off spread because we think the $4.00 LL is cheap and the HL is either reasonably priced or rich given the current weather outlook
    - NP15 – might be a good time to put on the spread to SP or MIdC, but it might be a better time on Wed or Thurs if cash weakens today. No Position
    - SP15 – weak loads, lots of returning units – hard to love BOM SP at today’s lofty prices
      - Hard to own the HL given the weather outlook, but might be a good time to jump into some On|Off
        
        Market seemed to have blundered into over-bidding up the spread, so we’ll fade you
        
        SP HL – short
        
        SP LL – long
        
        Palo – like SP, hard to love rich and Palo seems rich given the rest of the WECC is weak:
        
        We’ve been long this off of the BOM: Prompt roll and got paid, now we’ll bank the gain by buying the Palo On|Off
        
        Who wouldn’t want to short contract highs?