Good Morning,

More of the same, weather cooling down in the Northwest and staying unseasonably hot in the Southwest while all of the west remains dry.

The above dashboard is NOAA’s outlook starting on Day 6, before that the Northwest will get a spattering of rain:

Nothing that will make much of a difference, maybe a few hundred MW west-side rally, but zero impact where the production resides. Term markets, led by BOM, continue their slide.

The ISO contracts are low; the NP is at a contract low price-wise, and Palo and MidC are approaching the same. Surprising at Palo, given that its temperatures have been well-above normal but goes to show its all about SP15; if the mother ship crashes so do all her wards.

Off Peak is a similar story, perhaps less dramatic. All both dashboards say is how poorly the market traded during the late-July early-August period. Mostly, you can blame liquidity; there isn’t enough depth to stop these rabid moves. No big daddy left in the market to stand in there and sell into the rally. Instead, the market gaps up $50 on about 200 MWs and guess who pays? The Ratepayer, of course. And who is to blame? The  FERC and other paranoiacs who don’t understand trading.

Noone talks about term markets anymore; go to a conference and everyone is drooling over the EIM -a five-minute market. Why? Because you can’t lose much money in five minutes, its safe and predictable, meanwhile the 1000s of open term MWs are left unhedged to be ultimately covered in real-time.

LMP spreads are tight at SP-PV because PV still has strong summer loads; the spreads blow out between SP and NP and SP and NOB. The NP-COB spreads remain tight, in fact, most hours the COB line is not full. You’d think the spread would trade at losses, but it just trades flat.

Socal Citygate spot continues to melt back to reality; now she’s back to a three handle, something we haven’t seen since June. Not surprised, the hub is sitting on 20 bcf more gas today than the same day last year. Yet, Socal still commands a premium over PG&E even though the latter is 15 bcf behind last year. I guess the fear of running out of winter gas lingers.

Premiums linger; the Dec sports a six handle at Socal Citygate. Contrast Socal with PG&E for Dec:

If I were to guess, I’d say Socal has an embedded twenty-degree cold anomaly within that price. That is about how cold every day between Nov 1 and Dec 31 would need to be to support those prices. Does anyone want to take that bet? Obviously not, given the current market price. Remember, this is Dec and will quit trading around Thanksgiving. Its price will be a function of November cash as much as where Dec spot clears.

How cold does Novy get? or Dec?

Just for fun, we computed the Average, Minimum, and Maximum temperatures at Burbank for Nov and Dec over the last twelve years. Burbank has a better shot at heat than cold in November, the coldest it ever got (on any hour) was 39, and that was in 2011 and 2015; last year it hit 45 for a single hour.

December is chillier, about five degrees on average, but still, the odds of extreme cold are less than Trump resigning.

In fact, there is less than a 1% chance of seeing any hour colder than 36 degrees; 97% of all December hours were warmer than 40 degrees (last twelve years). The odds of extreme LA cold are even lower if you throw out the years 2006-2010, given the warming trends of late. The point is, Dec is over-priced, still.

Meanwhile, California gas fundamentals continue decaying and, with no heat in sight, will probably decline even further. Note Socal supply hasn’t moved while sendout plummets, hence the massive storage builds.

The above plots daily totals for Jackson Prairie; we were curious to see how far behind the Northwest fell because of tight water. The circles reflect same day for the previous four years; JP is behind, but not by much and would only take a few weeks of hearty injections to be back on track.

Power Fundies

Loads are off, week-on-week, at all four hubs.

Vegas has now fallen 5-10 degrees behind Phoenix, Burbank has bounced along in the low 80s for a week, and the Northwest is flirting with Heating Degree Days.

SP’s forecast got a bit warmer in days 5-7; San Jose will see steadily warmer weather, but nothing hot and the Northern portion of the state will stay bearish. Phoenix remains hot, but its price can’t rally because of that bearish ISO. The Northwest got colder in days 6-8, and many homes will be flipping the thermostats to heat mode.

Meanwhile, the Southwest and Northwest continue running most gas turbines; the former because of loads, the latter due to the dearth of water.

Gas outages rallied, let’s see which ones are off:

It looks like the entire Encina project is offline as of a few days ago. Seems too early for planned maintenance and odd that the whole complex is down.

The ISO saw surges in wind energy coincidental to peak solar. The Northwest saw a massive and steady block of wind energy over the last couple of days.

Arrow remains cut which is driving flows at the Border to set seasonal lows. Fortunately, the wind is blowing south of the border, and BPA doesn’t need the water.

Coulee remains castrated by a lack of inflows and BPA’s desire to maintain the reservoir elevation, all of which has constrained the project’s shaping capacity. Yesterday was the least-shaped day in months. Perhaps that suggests its time to buy the On: Offs?

Not to say “I told you so” but I told you so. RFC jacked Nov (800 aMW), we don’t think that is over, and we believe Dec is due to a lift as well.

Not sure why BPA published its DC outages yesterday, they are identical to what they released in June. Perhaps just a reminder that the line is going to zero in another month. The AC has uprates in the back of the 21-day forecast.

Flows are net northbound on the Northern Intertie reflecting weak MidC Prices;  same direction for Path 15 and for the same reason; Path 26 flipped, most energy went into SP, and Palo realized its single most significant swing of the season.

Conclusions

It is tempting to go long; we’d be net long, all off of low prices, and hope for Socal heat. The position remains somewhat protected by dry Northwest and all of the WECC is approaching the fall maintenance season.

Good Morning,

Ansergy added a new report which summarizes weekly changes in crucial WECC fundamentals and markets. “Change” is easy to use and informative. Everything is relative, nothing more so than trading/hedging. At a glance, you can identify the key drivers, at a hub-level, that are pushing the markets around. You can also view how much the market is pushed around through our market metrics.

You can find the Change Report here: Execution Tools / Change

Ansergy reports 3 to 4 value types:

1. Last Year – Current week, one year ago
2. Last Week – Days 8-14
3. This Week – Days 1-7
4. Next Week – Days 0-6

NOTE: Only Weather has next week data; we are working on incorporating our forecast into the other Metrics.

Each week is seven days. In some metrics we break out HL and LL, others are 24 Hour averages.  Filter on the following:

• Source – the type of data, there are eight sources
• Hub – the location of the data, we have fourteen locations
• Agg – the aggregation method, includes Minimum, Maximum, and Average
• Metric – A subset of the source
• Metric Agg – A combo of Agg and Metric, used for mixing different Agg Types in a report

You can incorporate different sources to derive custom reports. In the following example, we combined Term Markets with Spot.

At a glance, you can quickly see how the market has traded this week (last seven days) versus the prior week or last year. Note: we excluded Next Week since its moot with market data, next week hasn’t traded.

Mixing Metrics, Aggregations, and Locations

A powerful feature of Change allows blending across metrics from many locations aggregated uniquely, For example,

In this report, we pulled Peak Demand (max) and compared to average hydro, max wind and solar, and average BOM prices.

The Change Report will become our Friday blog post, replacing TradeBook. We are not disbanding TradeBook, it is still available live on the site, but we believe Change is more appropriate. Each Friday, you’ll receive our recap of the week just ended (through the previous Thursday) and any thoughts on the week to come.

All The Best,

• Team Ansergy
• [email protected]
• 206-877-0991

Good Morning,

Let’s start with NOAA’s outlooks.

In a word, bearish demand-wise and very slightly bullish hydro-wise. That cold anomaly in the 6-10 day spills deep into California; this will crush ISO demand. The deserts will remain hot, but that’s the only place, aside from New England, where it is roasting. It is that warm weather, held in place by a blocking high, that is pushing Hurricane Florence into the Carolinas.

They say no hurricane since 1950 has hit the US from where Florence sits today. Never say never!

This monster is set to land as a Category 4 and will rain on everyone’s parade.  Speaking of monsters, the WECC genie has been put back into the bottle.

Check out those four crashes; prices are back to pre-summer, pre-Aliso Hype, levels. You may color in all the area above the red line and label it “hype” or better, “fear”. Now the fear is gone and its safe to be long, all you need is one of those Santa Anas to get paid, but we don’t see any in the next fourteen days.

Prompt premiums have been removed, too. Could this be the start of a long-term bear market? If LA doesn’t get hot, and it doesn’t always have a late-season heatwave, then there is nothing to rally this market until it gets cold, and that is at least two months from having a snowball’s chance in Burbank of coming to fruition. Two months of just bearish news. But there’s money to be made in those kinds of markets; there are always pricing anomalies. Perhaps its time to dust off APT?

The LMPs are noteworthy in two ways. First, the external hub’s heat rates are still sky high when compared to the ISO. Second, note how flat the off-peak prices are. Across every node, there isn’t even a dollar spread.

Socal Citygate still commands a premium, but now its just $1.30 over PG&E and Border is below both. Check out the train wreck in Canadian gas; both AECO and Kingsgate busted the buck, they can’t even give their gas away. Finally, and most interesting, the only hubs that saw a rally over the last five days were Sumas and Stanfield, which speaks to the lingering tight water situation in the Northwest.

Hey, don’t those charts look like BOM? Well, those are plots of Citygate, why would the MidC chart look like LA gas? Meanwhile, the fear has been beaten out of these strips, and without that late-season heat, the angst won’t return until LA dips into the 30s and even then, it has to stay cold for an extended period to make a difference. Remember, Socal is sitting on 15 BCF more gas today than the same day last year or the year before.

PG&E is in the opposite position; that LDC is about ten bcf behind the previous two years. Socal hasn’t had a draw in a month, PG&E is still drawing while Jackson Prairie injects most days.

Not a lot to say except everything in Cal gas land is back to normal.

Power Fundamentals

Loads rallied across all four hubs with SP leading the charge off of the 90s in the LA Basin.

The Northwest was as temperate as temperatures get, stuck in the low 70s, perfect golf weather. That teasing heat we saw last weekend dissipated into the low 90s in LA and low 80s in San Jose. Now, it looks like those temperatures are poised to slide to the colder side.

Phoenix and Portland all show builds from the forecast three days earlier, but Portland’s build only takes the City of Roses rallied to the high 70s, not a load event. Phoenix, however, remains unseasonably hot. The ISO has no surprises, good or bad, just mostly more of the same.

PV #2 is down to 80% as it most likely is heading into its refuel (the last one was April 2017).

This is interesting, SP15 saw its gas noms spike off of the modest weekend heat, yesterday it burned almost as much as it did when Burbank hit 105 in July. I guess that’s what happens when the price of gas is just $4.00 instead of $16.00; the gencos can afford to burn their own gas. Palo and the Northwest remain quite bullish, the former off of that lingering heat and the latter off of that persistent drought.

Gas outages remain at minimum and now that SP is using its own units those outages might potentially matter – emphasis on “might.” SP is barely clearing a 10k heat rate which leaves a lot of economically dispatched capacity on the sidelines.

Seattle and Portland will get wet this week, but the production-centers won’t see much. This forecast will have zero impact on Northwest hydro resources.

The Peace swung into a baseload regime, drafts from Arrow tanked, and the flows at the US|Canadian border continue to decline.

Coulee discharge has been scaled back post-Spill, BPA doesn’t need the energy and is in its saving water mode.

BC Hydro has a hole in its system, total storage is slightly behind average, while the Northwest is precisely at normal. California quit drafting its reservoirs as it stares at a potential El Nino. Per NOAA “The odds of El Niño emerging in the tropical Pacific by fall have dropped slightly to 60% (from 65%), but remain at 70% by winter. ” Those seem like pretty good odds to us; no doubt our friends in Kalistan are praying they get one. It’s like manna from heaven for them.

Flows through the turbines on the mainstems are nearly back to Spill levels. There was a surge in energy for a week, now almost back to the August production levels.

Shasta scaled way back, the Pit quit shaping water, and the rest of the rivers are at minimum flows.

Time to climb back on this horse, the Nov-Dec STP pony, that is. We still think its way too bold for our friends in Portland to predict the lowest November in 20 years, not while they are forecasting BOM and Oct to be about average. What gives? Are they really that good that they can predict a massive precip anomaly sixty days out? From past performance, we think not.

If the 10 Day is a Tell, it is telling us to expect BOM cuts in today’s STP; those BOM cuts may spill into OCT and heck, why not cut Novy-Dec some more, too?

Some tweaks to the AC’s TTC, nothing changing on the DC front. We circled the Oct DC outage since its approaching that thirty-day window.

The Canandians are saving the Mid-C day by importing energy, otherwise, the price would be that much uglier. The AC cannot fill the line which speaks to how tight those spreads are. Despite a warm event in SP, flows on Path 26 are more north-bound than south. Flows on the Palo line have declined over the last week as APS tells the ISO “no thanks” and keeps its energy at home.

Conclusions

Bearish, but the best cure for a bear market are low prices, and that’s what we’ve got. I’d start layering in some long lottery tickets in the south and pray for a big Santa Ana. If it doesn’t happen, doubt there would be that much pain. As long as the Northwest doesn’t get any significant precip, energy will be tight everywhere.

Good Morning,

I suggested using EIM settles might work as a proxy for an hourly index. After running some numbers, I think it still might.

The test covered from Jan 1, 2017, through Sep 4, 2018. The EIM price is the average of the 12 hourly ticks, excluding the two smallest and biggest (8 ticks per hour). The MidC index is comprised of Puget, Portland, PacWest, and Powerex (Powerex started in April 2018). The average EIM HL price during this period was $22.77 while the average ICE settle was $29.74. If you exclude the blow-out prices this summer, the delta drops to about $2.00 (EIM still under).

Most of the year, the EIM Index tracks the daily settle, though in bullish markets it lags. Of course, this is not apples-to-apples, the Daily Settle is a forward of a sort, and the hourly market prices reflect the reality of that hour. A better comparison would be against the hourly settle, but we don’t have that dataset.  The correlations, however, are positive and not statistically irrelevant. All hours had an R-value of 0.62 while the period after Powerex joined jumped up to 0.68. Again, the correlations should be against hourly.

We also looked at Palo Verde; the difference is there is only one entity, AZPS,  participating.

The Deltas are more prominent and the correlations lower, but same issues at Palo as MidC. Half of the delta is explained over two weeks this summer.

We suspect you get an even better index if you average in Nevada Energy and even PacEast.

Drop us a note if you’d be interested in seeing Ansergy publish an Hourly Index using this approach.

• Team Ansergy
• [email protected]
• 206-877-0991

Good Morning,

The heat’s back but somewhat short-lived. We saw big heat in San Jose yesterday, today the Bay Area has cooled down, nearly ten degrees cooler than yesterday’s forecast. Still, the heat is real and will arrive this week.

Thursday

Friday

Saturday

Sunday

Monday

Sunday looks to be the hottest, seventeen degrees warmer than Thursday. BOM LL, anyone?

It’s easy to overlook days 0 to 6 if you over-focus on NOAA’s term forecasts.

Those remain warm in the southwest and well-below normal in the Northwest. Unlike the late-July early August events, the Northwest won’t find itself in such dire straights. Not only will loads be off, the spill ended.

Net, this change isn’t creating much new energy, mostly it means BPA has way more bullets in its magazines to fire at head-fake bullishness. Should NP enjoy big clears you should expect Malin500 to be full. Of course, NOB will be full as well.

Even with the relatively mild forecasts for today,

the LMPs rallied up everywhere. It seems the market wants to jump, just wait until loads support those leaps and we’ll be back to triple digits in power and double in gas.

That small rally in LMP price was in the face of spot gas declines resulting in a more normal type heat rate for SP15, 10k. The rest of the heat rates are nuts, still 13-15k on mild weather. Seattle realized a high of 73 and Burbank flirted with a 70 handle, too.

Term Socal Citygate remains in bear territory.

The above charts are all major west gas hubs, the Socal bearishness is amplified when just looking at that hub:

We think October is interesting given its proximity to September and the number of late season heat events LA has realized (Santa Ana, anyone?). Let’s see if term gets bid up this week. One fundamental reality that may have finally been factored into price is storage. Socal is sitting on 20 bcf more today than in the last two years.

The time to fear winter was last year; this year the LDC has 20 more days of 1 BCF draws than last year. The odds of LA needing 20 days of 1 BCF draws are close to zero.

PG&E is a different story, that LDC is 15 BCF behind its three-year average, but you wouldn’t know that from prices.

Demand is up, slightly at both LDCs, while imports are sideways in Socal and dramatically off at PG&E.

Power Fundamentals

We already talked about Socal heat, but didn’t mention Palo. It appears Phoenix will be getting ever hotter every day for the next ten days, cresting close to 110 which will set several new September records.

NP loads are up, SP sideways, and Palo’s are off. The Northwest’s were up. slightly, off of very cool weather last Sunday.  On the generation front, not much to report. The nukes are all running and its too early for Fall maintenance.

SP was becalmed over the weekend, as was the Northwest, but not NP.

NP’s noms staged a rally of sorts while SP’s cratered even further. Palo and MidC’s remain strong, be interesting if the latter backs off now that the spill is over. It must be tempting for BPA to make itself long by drafting into these 13-15k heat rates now that it isn’t wasting half its fuel on fish. Of course, if BPA makes itself long (by drafting) it makes all its Slice clients long too. Perhaps we might see cash spreads blow out?

Way too early to care about rain, or is it? The backend of this forecast is more wet than not and water is a cumulative commodity. Eventually, the ground gets saturated and the rain hits the rivers. Worth watching, not worth trading around it, yet.

The Peace is cycling, pretty much load following while energy flows northbound on the Northern Intertie. Arrow has been backed down mostly because BPA ended the spill.

The mainstem saw energy production jump because of the termination of spill, but total BPA hydro energy didn’t move.

Think that Pea game, no not the “Pee tapes”, the Pea Game. The one where there is  a pea beneath three shells and the scamster makes you guess which one the pea is under (when in truth, its under none of them.). BPA does the same with water; it now flows more through the mainstem turbines and backs off Coulee.

Where’s the pea? More important, where the heck are those “Pee” tapes? I’d give a free week to all my clients to see the Donald’s golden shower on CNN.

California water is getting tighter, Shasta continues to cut discharge but note that is inline with the ten-year averages. Strangely, the Pit quit shaping, not sure what is happening there. Did the reservoir  finally run dry?

Total ISO hydro energy production is off and, until it rains, will continue to drop. Although, with this week’s impending heat, we expect the ISO will draft again.

BPA raised TTC on the COB, no NOB changes.

The Northern Intertie is flowing North reflecting weak prices at MidC. Which reminds me, does anyone else follow the EIM clears?

In this plot, we filtered out the Northwest participants (Puget, Portland, Powerex, and PacWest). First, note they all begin with “Pee”; second, check out the tight settles for all four which makes sense since they are all clearing against each other, mostly. The question we have is this. “Do these prices reflect hourly real-time?” If yes, perhaps this is the long-sought hourly MidC index, published in real-time in five-minute ticks? Let us know what you think. We’ll do some averaging and compare to the dailies and publish our conclusions.

Conclusions

I wouldn’t be short SP, PV, or NP going into this heat. The MidC, maybe, but probably not. I might be tempted to own some spreads, BOM and Prompt, however. Eyes must be focused on the heat and today’s 12Z – does it build or not?

Greetings,

We added a new weather mapping tool, perhaps the coolest I’ve ever seen. You can find the link under the weather menu – “DarkSky Weather Maps.”

The report maps 13 different metrics hourly:

Metrics

• Temperature Forecast and Actuals
• Feels like Temperature
• Precipitation Radar
• Precipitation Forecast
• Cloud Cover
• Wind Speed
• Wind Speed Gusts
• and a few others

The map looks back nine days and forwards nine days.  Use the calendar tool to select the date you want to map. You can also use the forward/backward buttons to the right of the calendar tool.

The map is hourly; you can pick a date and hour, then use the buttons to jump forward/backward in three-hour increments.

Pick an hour to start; You can also zoom in and out.

Told you it was cool. One other thing, check out those San Jose temperatures next week – approaching 100 degrees. Get ready for another roller coaster rid on the SP15 express. The last heat wave wasn’t that hot in the Bay Area; this one looks like it might exceed total ISO demand.  Oooh, Lah Lah!

Mike

Greetings,

Ansergy has replaced its default home page. The old version listed the last few blogs (you can still access the blogs from the left-side Nav bar), the new is a 4X3 matrix of real-time reports.

Each report is updated hourly; the EIM is updated every 5 minutes. Click any report to expand and change locations. Changing screen resolution allows you to make these 3X3 or 2X2, etc.

These can be customized; this one is a Mid-C focused matrix, you may prefer SP15 or Palo. You might also want to see just Hydro or Transmission or Temperatures, your call. Let Garrett or Bill know what you’d like, and they’ll make the changes or, even better, you can make your own changes. The matrix is a dashboard called “Ansergy Report” and is available for modifications.

• Team Ansergy
• [email protected]
• 206-877-0991

Greetings,

Sometimes it is fun to step back and take in the big picture. For example, the Summer of 2018 will go down in the books as one of the most volatile periods in the history of power for any region on the planet. Only the WECC Energy Crisis of 2000-01 exceeded the volatility of this latest flare-up. There were winners and losers; the big winners were the unhedged generators with plants outside of SP15. Maybe a few long utes laughed themselves to the bank as well.

In times of high prices, there is always one loser – the ratepayer. He is the sheep tied to the stake in the middle of a den of wolves. No one protects the ratepayer, he is naked short and can do nothing about it. Back in the day, the utility looked out for its ratepayers but post-Energy Crisis most elected to move a disproportionate share of load into the real-time or day-ahead markets. Hedging? That’s way too risky; instead, we’ll cover his exposure in the more volatile front.

But this post is not about the miss-management of ratepayer wholesale exposures; it is about the cost of saving salmon. In a high-price year, you’d expect that cost to be even higher. We’ve compiled some data that summarizes the price of Summer Spill.

The two most expensive years to save the salmon were the last two and this year was 52% more costly than last year and 213% greater than the ten-year average ($130 million). The math is simple, take the spilled energy equivalent (adjusted for hydraulic capacity) times the hourly wholesale price.

The leap in cost wasn’t driven by spilling more, in fact, 2018 was the 3rd lowest year as measured in spill energy equivalents (MWH).

It was also the third lowest in total energy generated (Spill Plants), but the value of the generation was the highest ever.

Fortunately, all of that value was used to offset residential demand thereby protecting, somewhat, the vulnerable ratepayer.

If you are interested in learning more about the study, or would like some additional work performed, drop us a note.

• Team Ansergy
• [email protected]
• 206-877-0991

Good Morning,

The heat is back, at least in LA, which is where it impacts the WECC the greatest. The current forecast isn’t that mind-boggling 100+ heat, but the trend has been warming, and it wouldn’t take but a few more days of incremental warming to get back to those panic levels.

We have combined Precip with Temps since the seasons are changing and our focus on hydro will grow. For now, we aren’t too concerned about precipitation but will still watch it. Back to the heat …

Check out the deltas between today’s Burbank forecast and three days back; those are the values most interesting. The absolutes, 91 high, of course, are relevant, but the trend is too, and that is building. Keep a wary eye on it over the weekend; we will be.

Because, if temps do build in LA, this massive term socal citygate selloff will stop and reverse itself. For now, the entire strip is in a freefall which goes to show how much hype is built into term markets. You’d think after 20+ years of trading the market would be more mature but those charts suggest otherwise. I guess that is because the average tenure of a term gas (or power) trader is about five years; no one can remember what happened beyond that because they weren’t around, they were in drunk in college dreaming of becoming the next Marc Rich.

And power follows citygate, everywhere! LOL, you’d think every power plant in the WECC burned citygate gas, but you’d be wrong.  They burn Sumas, Stanfield, Malin, Permian, Cheyenne, Kern Delivery, and PG&E; but they don’t burn Socal Citygate. That is the most astounding takeaway from the 2018 Energy Crisis – the virtual gas pipeline that ties every western price point to Socal Citygate.

LMP prices are a bust of late, or maybe they are just back to reality. Probably more of the latter than not, though the weather is mild and loads are off, and prices are down. But wait, a ripple was felt yesterday in spot gas.

No, not the AECO bust-a-buck price, check out the Buck Rally at Citygate! I’m Baaaaackkkkkk! That off of the return of heat, we suspect. In the pre-Energy Crisis days a dollar rally would be astounding, now you’re so numb to these moves you may not have noticed. Well, start noticing because the moves may get bigger if that heat grows.

Check out the Socal Sendout last year versus today’s; that’s what happens when LA gets hot. It may be almost September, but that cauldron called LA runs a higher risk of deep heat now than it does in July. Also, take note of Storage in Socal vs. PG&E; the latter is running about 15 bcf behind the three year average. The former is about the same ahead of a two-year average (the Aliso-derate period).  Once the risk of summer heat fades (mid-October?) we think this reverse storage issue will impact term markets; for now, it is overshadowed by the prospects of Socal not serving its winter loads.

The decay in loads continues, every week it’s off, but that will change in LA and probably Palo, once the heat arrives.

NP and SP’s freefall in gas noms has abated; expect both to rally strong next week.

Outages in the ISO remain a non-issue. All the nukes are running making one feel like the cowboys sitting around the campfire saying “it’s too quiet out there” seconds before they all get scalped then barbequed.

Blame some of SP’s weak prices on renewables, Monday and Tuesday set summer highs . MidC’s wind remains on/off; was on yesterday and off Mon-Tues.

Told you we were starting to look at water; the Northwest gets a smattering next week. Not enough to change streamflows, but this is the biggest dump since spring. Not sufficient to saturate the ground, but its a start.

Lots of changes afoot in the regulated BC Hydro reservoirs, all triggered off of declining loads and the anticipation of Spill Abatement on Saturday. BPA doesn’t need the water; they survived summer.

All of that CFS going over the spill gates could be shifted to the turbines starting on Saturday. It won’t; most will just stay above the dam, filling the reservoirs or, more accurately, not drafting the reservoirs. That said, the return of this water for energy is a big deal; BPA’s bullets just doubled in an emergency.

There is no volatility, day to day, in Coulee’s generation. Compare the Period Average line (Black) to the Daily Average line (gray); very tight all of which says things have grown soft in the Northwest. BPA has no problems serving load.

We still don’t get the NWRFC’s November and December forecasts; both are projected to come in at 20-year lows. Huh? We understand, the reservoirs were pulled to serve big summer loads, it was a mini-Energy Crisis. Still, reservoirs are not that low, in fact, they are just average.

BC is off a bit, but I’d call that rounding error. Contrast today versus the low; it’s like 3 MAF higher. And the US Northwest is precisely at the average which is a 1 MAF above the minimum. No, these storage levels do not support those Nov-Dec STP forecasts; we are convinced they will be radically revised upwards.

The 10 Day is poised to slash total water but only because Spill goes away; water through the turbines (QG) won’t change, or if it does most likely will go up. The above plot merely reflects NOT wasting water on fish.

Several new short-term transmission outages reported by BPA.

Look at the direction on the Northern Intertie, just to show how weak the Northwest is. Plus, the DC is hitting TTC on many hours, and the AC even blew past TTC for a few hours yesterday. Now Path 15 is northbound nearly every hour, and even Path 26 is flowing North more than south.

Conclusions

Cheap often means buy, cheap coupled with growing bullish fundamentals means buy even more. We’d be long in the south off of a heat lottery ticket which means we’d be long everywhere because it doesn’t matter what a non-SP hub’s internal fundamentals are in this new world. If SP blows up, so shall the rest of the WECC.

Final thought for the day, check this one out.

The market has taken a shining to June MidC. Whoa, June? We guess its all about El Nino…

Sorry, that is one of the weakest equatorial anomalies we’ve ever seen associated with El Nino. Sure, it will build, but to jack June up to a 15k heat rate off of that?

Good Morning,

We’d love to have a rant to rant about but don’t. Instead, we have this:

Cool to cold in the Northwest and mild to a slight warming in the south. The northwest has lost its positive precip anomalies, not that those were that important, they weren’t. All in all, it is a neutral to bearish forecast, except for that warming trend in the south. The above is Sunday’s forecast, keep an eye on today’s.

Socal Citygate continues its freefall back to reality, yet substantial premium (to April’s prices) remain. Should that Socal heat build, expect this trend to reverse, as well as this trend…

Who would have thought, on August 5, that by the end of the month Palo BOM would be trading at a 16 month low – both heat rate and price? Don’t think this cheapness is limited to Palo …

The MidC is the same story, the heat rate hit a chart low last week, and dead cat bounced to still being a low. All of which is being driven by a cash market that is in free fall.

Price wise those LMP DAs seem cheap, but not when you look at heat rates; those 12-13ks reflect most units running, which is the case outside of California:

Inside the Golden State, the power gas nominations have collapsed, but not outside. Both Palo and the MIdC remain near summer highs.

Check out those AECO prices, $0.34/mmbtu? Unreal, why aren’t the wells being capped? Why is anyone still drilling in BC or AB? Oddly, compare the AECO price to Sumas, is that all pipeline profit? And last, the PG&E Citygate to Socal Border spread has returned to status quo. For how long?

Socal’s fundamentals are unchanged over the last week or so; demand is off, but supply is constant. Not true up north, PG&E saw both supply and demand collapse (Power). Meanwhile, Socal’s storage outlook grows ever rosier (if you’re short or a ratepayer, but hey, that’s the same thing, right?):

Socal’s total storage is at a two-year high and growing. PG&E finally started injecting for the first time in a month, so did Jackson Prairie.

Power Fundamentals

Loads collapsed, week-on-week, across the WECC, every hub is way down.

Check out those frigid Northwest temperatures – the 60s! Most of the WECC will grow warmer.

No city gets hot except Phoenix which is projected to approach 108 by next week. Portland rallies for a day and collapses back to low 70s. San Jose is mostly sideways but with an upward drift. Burbank steadily grows but check out the changes in the 7-10 day; the latest forecast collapsed relative to three days earlier.

Solar is stable in the ISO, and the Northwest finally saw big wind; after a month of begging for it, and not getting any, now it comes, just when it’s not needed. Go figure.

Our forecast for the MidC shows wind coming off later in the week, same at SP, while NP is mostly sideways. Total WECC wind energy is forecasted to grow through Wednesday, then sideways.

Who’d a thunk we’d post a precip in August? These are projected daily totals in inches for six Northwest stations. None amount to much, anything that falls will be soaked into the ground. The only respite for Northwest hydro is the abatement of spill scheduled to begin on Saturday. That will only make the Northwest longer unless BPA cuts total discharge, which most likely they will. But in the next crisis, if there is a next one, the feds will have more bullets; end of the spill is bearish no matter how you spin it.

BPA’s reservoirs are now above average, all at the expense of its treaty water in BC which is below average.

Significant changes afoot for our neighbors up north. Arrow discharged has collapsed, so has the Peace. The latter because BC doesn’t need the energy; if its 66 in Seattle its 64 in Vancouver. Not to mention energy is now flowing north-bound on the Northern Intertie.

Energy production at Grand Coulee is off only because BPA doesn’t need the energy.

The rest of the mainstem was up on Sunday, not sure why given that the system was long off of wind.

All of those Canadian changes have hammered inflows at the US border. The rest of the rivers above Coulee are sideways, though at seasonal lows.

The NWRFC’s ten-day forecast has dramatic cuts in water but don’t confuse that with energy; these merely reflect the expiration of spill. As for today’s STP, we will stick with our expectation of increases in November.

The ISO has backed down its reservoir drafting; peak water is off the most. Off-peak is just sideways.

Some new cuts in TTC, see above.

The Northern Intertie is now flowing north for the first time in eight weeks. Both the AC and DC are full for the first time in eight weeks. Path 15 is flowing Northbound, so is Path 26 on a few hours. All of which reflects an endemic softening across the WECC.

Conclusions

Summer isn’t over, and Socal Gas’s problems haven’t been fixed. Cheap has always been a strong buy signal to me; I’d be placing some long wagers just about anywhere, though SP would be first on the list. Remember, last year the ISO set a high (load and price) in the second week of September. Recall too that every year there has been an October surprise.