Impending Doom

Good Morning,

No, the impending doom isn’t from Trump assuming the presidency today, that may come, our grim outlook relates to WECC power. Mostly driven by the inevitable transition out of Winter heating degree days into the no man’s land of Spring. Next week we will switch back to Temp Max for the Southwest but will continue to post Mins for the Rockies and Mid-C. One fact that throw’s a monkey wrench into our outlook is an extended dry spell heading towards the WECC, the longest string of dry days we’ve seen since September. But, we get ahead of ourselves, let’s first take a peek at loads.

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Demand

The Mid-C has lost its load luster; peak is well of from last week (last two week’s, for that matter) highs. NP15, on the other hand, saw a nice spike over the last two days, which may also explain some healthy HA prices in the ISO:

$80 handles are nothing to sneer at, and even SP popped out some 70s; but we found the number of ticks in those higher ranges surprising, all of which suggests our south length is the right play against short north, at least demand-wise, need to look at the rest of the fundies before making that definitive call.

Back to loads; note the recent rallies at Palo in its light load hours; we pointed out earlier how the bottom had fallen out of the bottom, but now we see a slight rally in those low lows; perhaps enough to save that hub’s abysmal light load market?

Those California loads are worthy of a deeper dive.  LDWP and PG&E both saw big rallies, so did NCPA. While SP and SDG&E didn’t move much; kind of strange that LDWP would be more responsive than SCE, huh?

The BA story at MId-C is one of load destruction; every BA falls, some harder than others – check out BPAT’s fall from grace. Ouch. But how does it look going forward?

The interior refuses to warm up; probably God punishing them for voting for Trump.

California cools (how could it not, its 10 degrees above normal), then the outlook drops for a couple of days, before returning to above normal; nothing in this forecast that would make one want to be long, or short.

The Northwest refuses to warm up either, at least the Trump east side is cold. The Clinton west-side shows hints of some fairly big positive anomalies, clearly, a bearish outlook after you get past next week’s cold.

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Hydro

Californian’s have been praying for rain for the last five years; the powers that be finally heard those prayers and are delivering lots of wet; another major storm is poised to pass through the state this weekend which should set up the Sierras for the biggest snowpack in the last ten years.

The Northwest is poised for an extended draught, like a two week stretch of nothing. Better sharpen your edges, you’ll be trying to carve turns on ice (skiers). The NWRFC sees this drying weather and has whipsawed its Water Supply downwards:

And not in a modest way; IHR is down 15%; GCL is down 7%; and TDA down a ridiculous 9% – all in the last ten days. We agree that you must back your numbers down in dry periods, just don’t get how a year-to-date number can drop 15% in ten days (IHR). Forget the amount of the drop, the water supply outlook for the Northwest is weakening, but there is still a lot of snow up there; there will still be single digits in the onpeak day ahead market at some point during the runoff. When that occurs will be the million dollar question.  One certainty will be lower drafts with the lowering of the water supply; all of which means a bigger deferral into May-June.

This is a new dashboard, appropriately named “Rivers,” as it is a snapshot of all flows in the WECC. A couple of observations:

• Flows out of BCH remain crazy strong which is going to keep the Mid-C bearish once it loses that cold weather
• Flows at IHR are off. So is the discharge out of LIB, but the Pend Oreille is up
• The Sacramento is off the charts, the state has no more room in storage and is just puking its prayed-for water into the Bay.
• Mid-C side flow indexes are mostly sideways, except for the Lower Columbia which has spiked of late; we think all of these are going to spike big time post-cold and could put another 20-30k into the mid and upper Columbia at a time that no one is going to want that water. Impending Doom.

Our buddies in Portland are getting worried about this dry; they have backed off about 1000 aMW of projected hydro energy versus Tuesday’s STP.  That won’t entirely cover the load decay; we don’t think, rendering the hub net bearish, especially if they are wrong and natural river flows rally as loads fall off of warming weather.

 

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TransGen

The Mid-C is also going to see a sharp rally in wind energy, so will SP. Meanwhile, the ISO has returned 2000 MW from outage, but that too shall pass as the Southwest enters its spring outage season.

SP is sideways, but NP has nearly every gas unit available.

Another new dashboard is our Hub-level Gas noms from power plants, and it is bearish in three of the hubs and bullish in two. Palo gas has taken the month of January off while Mid-C remains nom-strong, and so does the Great Basin.

The AC line may as well have been in maintenance yesterday, its average flows fell to 600 aMW, but the DC set a two-week high and the flows out of ZP are back to normal – all heading at NP.

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Conclusions

The good news is all of our TradeRank reports are now fully restored; we had an issue with our Market Price provider, but that has been fixed. We also had an issue with the New Trade Rank – all of the Trade Rank dashboards were pointing at the Old Trade Rank; we fixed that last night, they all are live with fresh data. Let’s take a look:

• January – it’s over, delegated to the history books, and whatever length we had there we’ll just let it liquidate against the index as we like the cool weather next week.
•  February
  • 
    • All the onpeak’s are up while the offs are sideways to down.
      • Mid-C – drying but warming, we still fear low-elevation melt and are confident that loads will fall and natural river flows will rally ………….SHORT
      • SP15 – outages are off a bit, but we see those increasing and loads can’t get any lower, at some point, there may even be some CDDs in Feb (long shot, but its happened before). Long off of short Mid-C, new gas outages, and a general tightening in the southwest
  • March
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      • Light loads rallied at MidC and Palo; we think that is a mistake at both hubs
        • Palo – long the on/off
        • MidC – short both the on and off
        • SP15 – long off of the spread to Mid_C
  • April
    • 
      • Same story in April; the light load is getting a lot of love relative to the on while SP is basically ignored
        • Palo – Short the LL
        • MidC – short the LL
        • SP – long the HL spread