Good Morning,
While Houston is awash in, well, backwash from Harvey, the WECC is ablaze in, well, a blazing heat wave that stressed the system like none since perhaps the Energy Crisis. Let’s first look at how the market responded:
These charts hardly do justice to how tight things got on Monday and Tuesday, but clearly, the system was nearly out of reserves.
Mid-C has recovered in the Next Day for today, all the hubs are off, but check out those Tuesday’s for Wednesday; all the heat rates settled in the 30k-40k range, with the MidC leading the charge. Also note how little off-peak moved, which will put upward pressure on the on|offs in the term, something we expected on Monday which is why we held off on layering in the bets then. Finally, the Socal Gas situation was also severely tested, and now the spread to PG&E has blown-out, not only inside SoCal but on all the pipes bringing gas to the state. Border prices are $0.65/mmbtu higher than up north; the Northwest gas just yawned its way through the event. The real sleeper and big surprise was Palo Verde. Where usually Socal and APS are fighting over who has to take the energy, this week they were scrapping over who gets the juice. The hub blew out, relative to the ISO, which is reminiscent of the Energy Crisis.
Gas Noms are a great way of measuring Reserves:
Every hub approached or set, its CY17 peaks this week. That alone is perhaps the most remarkable factoid; every hub was hot and stressed out and bothered by the heat. MidC added to its woes with its nuke off-line.
Check out the Northwest noms:
Wednesday set a record, probably for all-time, for total nominations. Interesting that the spot gas price didn’t budge which demonstrates how sufficient supplies (pipelines) are for the region. California must look on in envy. Avista had its peaker running baseload for the last couple of days, and look how they had to ramp up Fredrickson and Mint Farm; no doubt things got dicey.
The Northwest had one other plant that saved the day:
Coulee doubled its output; average discharge was a runoff-like level of 120k; even the off-peak screamed up 250%. Note the reservoir was drafted hard and now is where it normally would be going into the post-spill Fall. That plethora of hydro energy phase is coming to an end:
This is the 10 day forecast, paired with the STP for the same days, and reflects total water, not net of spill. The actual haircut is much less and can be viewed from our forecast of hydro energy:
Gross water declines nearly 4000 aMW, but factoring out the end of the spill the actual cut is around 2000 aMW, still nothing to snicker over.
We talked about the Northwest hydro and how adaptive it is to the market, how about the ISO’s hydro? Uhh, didn’t even respond, or if it did, just barely. Onpeak flows just went sideways, maybe up a touch, while off-peak continued to plummet back to the dry reality California will soon face.
Demand
Let’s start by looking at the loads:
California (all utilities)
Pretty much says it all, loads peaked over 10,000 MW higher this week versus last.
The Interior (everywhere but Northwest and California) looks similar, though the region peaked on Monday and has steadily come off since.
Same story for the Northwest, though yesterday’s loads mostly collapsed back to reality. Given the big noms scheduled for today, the hub will find itself long.
Looking ahead, the pain is not over; the heat lingers and builds in the Northwest. The load centers will see new highs arrive over the holiday weekend. What with the big draft at Coulee, there are not a lot of hydro bullets left for BPA to expend. Note how many days are above normal in Portland and Seattle.
Check out those 100s in San Jose, Burbank, Sacto. The state is not out of the oven just yet, and for the next ten days, every station is above normal. This party is just getting started 🙂
Just to show how hot it is in the Bay, the above plot compares the record high with the current forecast. San Jose is not just setting a record; it blew out the past one by seven degrees. Doesn’t Al Gore live there? This heat will be an inconvenient truth to all the dot bombers, and you can be sure the swimming pool chillers will be set on the lowest.
Don’t write off the Southwest, just yet. The region broils on high for another seven days, and with the gas market topsy turvy, at least in the south, the spreads might do interesting things.
As to be expected, the transmission flows are all over the map, except on the Northern Intertie. Powerex has just been a steady seller and saved the MidC from a lot of pain. Trump should invite the entire Powerex team to the White House and give them a medal of honor.
The Northwest is starting to sell hard back into California, but with derates on the AC those levels will fall back:
Flows into LA, via the DC line, are back to season highs — call that a virtual gas pipeline. Might get interesting when that DC goes down for its Oct maintenance, especially if the Santa Ana’s continue blowing.
Conclusions
It’s Term Thursday; we’ll be doing a walk through of what’s changed in the back-end of the curve in a post to follow.