Good Morning,
The weekend saw the arrival of Southwest heat, but more is on the way:
Phoenix mustered 110 which was dwarfed by the 115s in Palm Springs. More telling than either of those two extremes was the 102 realized in San Jose, 13 degrees warmer than Burbank and a whopping 28 higher than San Diego. Clearly not an ISO design day, at least in SP. Does that hold true for the future?
No, it gets hotter this week and even the cooldown for next week has reversed itself. Retentive heat is what breaks the bank and looks like we’ll get some of that in the ISO; we’ll get lots of it in the deserts:
The Phoenix outlook has softened a touch, but nothing is soft about 118. We do note some cooling at Salt Lake and Denver later in the week. Peak loads will be realized on Tuesday, perhaps Wednesday.
The Northwest tries to jumpstart its summer with both Seattle and Portland posting mid-80s; that is hot for Seattle, not for Portland, yet both will realize incremental load over today.
So how did the ISO fare yesterday on that 102 day in San Jose?
Look no further than our new ISO L&R report for that answer. Loads soared, imports were actually off a touch, wind was down, and thermals rallied, up 15000 MW from a week ago.
Loads may have soared, but there were a couple of dozen days last summer that was higher, but yesterday was a Sunday so let’s see how things play out today and tomorrow.
Big day for thermals, they set a 2017 high yesterday (on a Sunday!) and should approach last summer’s highs this week.
Hydro
Loads are bullish, no doubt, and we think there are signs of bullishness in the hydro outlook.
Our close associates in Portland concur, they’ve chopped 1000-2000 MW off of their STP outlook for the near term and should make for a bullish STP today.
Flows at the border are off 70,000 CFS over the last two weeks; the water year is winding down. Snow levels confirm:
The redlined basins are mostly done; there remains snow at most stations but not much.
The Clark Fork is passing 60000 CFS, but that should start backing down, and most of those flows were caught in Lake Pend Oreille. The rest of the non-COE stations are at normal, a few below. The one we care about, Coulee, saw cuts:
Week on week its flows through the turbines were off 30,000 CFS, which is interesting given that BPA has mostly stopped filling Roosevelt:
Just a few feet in a week and outflows are dropping, what more do you need to know?
We read a piece over the weekend in the WSJ that suggested California is about to get swamped from all of that snow suddenly melting. Doubt that. Only one station has rallied, the Merced, the rest are mostly dropping, a few are below normal. That said, the state is setting four-year highs for hydro energy:
The above comes from our weekly ISO L&R report, and plots average On Peak energy for the last four years. The Light Load is more telling:
Where HL is about 1000 MW over prior year peaks, the LL is 2000.
TransGen
Not a lot to report on the generation front; perhaps the most surprising was the beginning of the return of the Columbia Generating Station:
The Hanford nuke is idling at 3% as of Friday which suggests its back no line this week.
For such a bullish day (today) we are surprised the Noms aren’t higher in the California and Palo. Perhaps that changes today.
Significant flows northbound out of ZP – to serve those 102s in San Jose. BC was a seller over the weekend as was MidC via the AC and DC.
Not much to report on ISO outages – there aren’t any new units off nor were there any returned tripped ones.
Conclusions
The markets have paused in their BOM rallies, and we think the markets are set to come off this week. The problem with this heat event is two-fold. First, the Northwest is absent, in past big WECC events Portland was 100 degrees. Even California isn’t that hot, at least the coastal cities like San Diego aren’t (highs around 79). Second, the WECC is still flush with hydro, both in CA and the PNW.
It’s always dangerous to sell heat before the heat arrives, but in an illiquid market, you need to be first. Therefore we will be …
- Palo – Short – gas noms aren’t even close to last summer, and with Utah and Colorado cooling there should be ample imports from the east
- SP -Short – mild San Diego and flush with water
- MidC – we’re buying both LL and HL in anticipation of declining flows and load rallies. LL spot cleared mid 5s and the term is trading below that. Coulee still has 8′ to fill in ten days and those are the hardest 8 feet.