Good Morning,
One chart says it all …
A single hour in the Day Ahead clears North of $500 and “voila” – A $106 day:
Interesting that today cleared nearly 2X higher than any day last year – was it that hot?
It was that hot in Palm Springs but was not “hot.” per se in LA. NP and PV baked, no doubt, but SP was just warm. How did the ISO manage its resources? To answer that question we’ll use our new ISO L&R Report:
Demand
Total loads were very high, but a few days last year were even greater. Let’s look at the resources:
We all know there was more solar, nearly 2000 MW higher this year than any time last year.
Same is true with hydro, though only 1000 aMW higher during the on peak hours than anytime last year.
Wind was off from previous highs and contributed to the strong prices. Another bullish factor was imports:
The balancing resource, thermals, sum it up best:
Only one-day last year saw as much gas online as yesterday and DA was about 50% lower. In sum, the $106 appears partially smoke and mirrors but does speak to the ability of the supply-side to drive price. Strike while the iron is hot, its cooling down soon.
Demand
Two more days of heat then back to “normal.” But that one day of $106 added a $6.00 premium to your BOM and if you held the length you got paid – we didn’t, oops:(
The heat is unrelenting in the desert and will carry well into next week which will effectively wrap up Palo’s bom. APS & Company are not out of the woods yet, and from the looks of their noms, there is blood in the water.
Palo blew past its highs of last year which, by the way, had same temperatures as we’re seeing. With heat’s retentive nature and its corresponding bullishness on subsequent day’s loads, we can expect more pain in the desert.
And there is a bullish nod to the Northwest via some Seattle and Portland heat; the forecast in the latter is now projected into the mid-90s which will be the CY17 high. Coupled with a rapidly decaying hydro outlook, there may be some pre-Fourth fireworks in the MidC.
Hydro
We’ll start with inflows to Coulee:
Dropping like WW1 infantry, down 75000 CFS in two weeks and note inflows are now below normal. Most of this water is being passed; Coulee hasn’t added a foot in a week to its reservoir:
And now we see the plant cycling – drafting into the onpeak hours and cutting during the off. With a spike in loads next week we’d expect even more shaping putting upward pressure on the off-peak markets.
Monday’s STP backed off about 500 aMW from BOM and Prompt, and the hub is now projected to be normal water by mid-July.
Several pundits predicted biblical foods in the Golden State, driven off of extreme heat melting extreme snowpack. We circled the stations that saw spikes over the last couple fo days, three of eight did, the others yawned their way through the event as their basins are plumb dry.
TransGen
Northbound flows out of ZP (Path 15) hit seasonal highs yesterday further underscoring the relative weakness in SP. The Northwest remains an exporting machine though was offset by the 1000 aMW sold by the Canadians.
SP saw a bump in its gas outages, Ormond Beach is offline:
Normally we wouldn’t care but with heat rates clearing north of 30,000 btu/kWh the units matter. If only it would have stayed hot a bit longer.
Conclusions
BOM
SP & NP have drifted sideways since Monday, but anyone that carried the length received a “happy ending” via those $106s in today’s DA. Maybe hold it again (wish we had) but maybe not, loads are tumbling to the wayside over the coming weekend. Palo continued to rally as well it should have. The system operators ordered “all hands on deck; there are no more hands to summon. The hub’s only reprieve is the big cooldown in Colorado and Utah.
Our bright spot was our length at MidC in both the HL and LL – the latter has doubled in price and we see another doubling next week. We see a few bullish items at the northern hub: Declining streamflows; deferred refill at GCL (huh, why’d they do that?); and a sharp rally in loads.
- SP – short
- Palo – covering short, flat
- MidC HL – long, adding to position
- MidC LL – long, adding to position
ADMIN NOTE: Mike will be taking a holiday for two weeks, he will be in Europe with his family. He hopes to post a few blogs while traveling, and will return to the states on the 9th of July. Bill and Garrett will be available throughout.