Good Morning,
The news today is the cold snap we saw before Christmas has grown, in both intensity and duration, into the real deal:
And it is dry, so chalk up today’s forecast as both bullish short-term and long-term, though that long-term affect merely makes the term outlook less bearish at this point. Too much snow to get excited about a dry Mid-C and it will take many dry outlooks to push this water year down. Back to WX, check out Portland:
Most interesting is the change from last week; this cold front has settled in and doesn’t want to leave reminiscent of last June’s heat wave – could we see similar prices? Nah, it’s not that cold (Seattle barely busts 30) but a rally is in the making and will spill over into the rest of the power curve and into gas . You Mid-C haters beware.
Loads are rallying up a bit, nothing to get too excited about except that the rally happened in the off peak which exceeded the last few week’s peak:
One bearish turn can be found in the NWRFC’s 10 day forecast:
That is about a gig of new energy (versus either STP or last week’s 10 day for the same days). No surprise here, BPA has no choice but to let the water flow to meet its demand and in doing so makes the Mid-C less bullish, at least in the short-term. Longer term more water now is bullish as it means less water later and you better expect a major upward revision in the STP today – which will be perceived bearish.
The Ansergy forecast says it best:
And is up $2-3 across the 14 day horizon and up nearly the same in the term, though that is a gas-driven phenomenon but you should expect continued upward pressure as long as the Mid-C stays dry. Another bullish change is renewables:
Take note of the total on the 23rd, that may have sent the CY15 high, if not it was close. So what’s bearish in today’s fundamentals, you surely ask? Nukes – they are all running, and BC is back to selling:
Between imports from BC Hydro and drafting Mid-C hydro the incremental demand from the cold front has more than been offset so from a net energy perspective not much has changed, at least on the surface. But keep in mind that Powerex will not be selling if the price is not right and BPA won’t draft if the price is not right, which means that any relaxation in demand will be offset by corresponding cuts in both NI imports and QG discharge. In other words don’t expect cash prices to plunge this or next week. Even the ISO is showing some LMP love, hitting a high of $43 yesterday (sunday):
STP Monday today and, as mentioned above, we are forecasting a big bump in January but don’t be surprised if you see the bump across the curve. I still think they are short a gig across their 120 day.
Mike