Monday’s Bright Outlook

Good Morning,

Apologies for the late arrival, we had issues with the dashboards and now have those resolved …and onto today’s outlook. A quick synopsis can be summarized in a word – heat; it’s coming back and so shall the markets.

Demand

California, even the coastal areas, are poised to realize the mid-90s for this week and spill even into next week. That is in stark contrast to the mid-70s of late and shall provide a jolt to an otherwise moribund market.

Strangely, the Interior doesn’t get as hot, as quick, and for most of this week, Phoenix and Vegas will be cooler than coastal California. Those SP-PVs that have recently collapsed shall, most likely, blow back out. Denver will see a load loss as it moves out of heating degree days into nothingness.

The Northwest gets warm, too, but not hot and we’ll see a few hours in the late afternoon with load spikes, but mostly it will be a non-event. The interior loads are barely as warm as the I-5 corridor, which is a quite strange phenom.

Loads of late have been down in the Northwest and Southwest and area climbing in the Golden State, more so in the LA Basin than the northern half of the state. Those loads are not done climbing.

Generation

Gas Noms are abysmal everywhere, but the Northwest which is well above last year, but we think that is going to change with a weak 14-day demand outlook and more water on its way. Noms in California are setting record lows for the season, but that too shall pass with hotter days ahead.

Gas outages inside the ISO are just normal; the planned maint. the season hasn’t begun yet — that is several weeks out. All the Nukes are running at 100%, but we expect a PV unit to come down soon.

SP15 realized some big renewable gen days last week off of a surge in wind, now that energy source is just normal. The MidC also saw its wind blow away and is now left with nothing.

New Harqualah either took some units into maintenance or the price was so bad they backed down; probably the former since Gila and Griffith are relatively unchanged.

Hydro

This is interesting, On-Peak energy plunged faster than Off-Peak and is now at the same levels it was last year, but still far ahead of the 2013-15 levels.

Equally worthy of a comment, the NWRFC 10 Day forecast is up across all days. Not sure what’s driving that, perhaps some of the recent rain is to blame. Regardless of ‘why,’ its bearish and today’s STP will probably push a lot of energy into BOM and even Prompt.

The Northwest has another mini-storm coming in five days, then is followed by another a week after that. Portland is poised to get 1.5″ over the next ten days while Seattle will see just half of that. Since I live in the latter, am quite happy the City of Roses gets all the rain. Nowhere is there enough rain to account for the RFC’s bumps, but there are other tells out there that point to that conclusion.

Three of the relatively “unregulated” projects have seen spikes of late; we’re confident these are rain-driven.

BC is setting five-year highs on Columbia River flows at the USA|Canadian border and the trend is up.

Coulee is behaving bearishly as its storage creeps up without affecting the discharge, all of which is bearish for early fall. The trend can’t continue, there are only five more feet to fill, so, once they quit packing bullets into their clips, outflows will rally — which is probably what is driving the RFC’s rally.

Final hydro comment, now every region’s storage is at or above normal; that is bearish, albeit modestly, but bearish nonetheless.

Transmission

I guess prices were so weak the Canadians finally bought a few kilowatts over the weekend. Check out those flows, relative to TTC, on the COB and NOB lines. Those are about 90% full, on average. Suggests the North|South spreads may blow out big time on this CA heat. Even Palo is starting to fill its line into the iSO, nearly up 50% over last week.

Conclusions

We will defer our Front End market research til tomorrow morning.  In the meanwhile, we’d be cumulating length inside the ISO and hedging it with shorts outside.