Good Morning,
The outlook for the northwest is, as the subject says, dryer and warmer than what we’ve seen earlier this week:
The warm will shed a gig or two of load, the dry will shed a few percentage points off of the water supply forecast. California is recovering from its storms and looks like there may be more on the way:
As the saying goes, “when it rains it pours” and Socal is awash in wet weather. Doubt there can be many El Nino doubters left, it’s here and real and real big and will drive prices up in the northwest and down in the ISO. Check out the Ansergy recap of the Q2 spreads for different water years sorted by Nino type:
Just compare the Y axis – nearly double in a La Nina. This is driven by an increase in hydro production in California and tight water in the northwest. The RFC is suggesting an ever-increasing bullish year for WY16 with most basins off 3-6% from a week ago:
Maybe too bullish, the snow pack doesn’t support those numbers unless they are using a very low balance of water year forecast:
Not sure what the RFC is using for it’s Snake River forecast because the snow pack doesn’t reflect a 74% water year. The NRCS summary supports that observation:
The market doesn’t agree either and thinks the Mid-C is in a big water year:
Given another dry forecast I’d be inclined to take on a some Mid-C length in Feb or March, perhaps hedging that by selling some SP. At some point the California reservoirs will fill and the entire state, all 10,000 MWs of hydro capacity, will become one big run of river plant.
On another note we have updated our STP reports by breaking out the Slice component from the total. You can query either total STP energy or just the Slice plants:
Whether you look at total or just slice the fact remains that the RFC is aggressively bullish in it’s current forecast when compared to previous years. Much too bullish, in my opinion, which is why Ansergy no longer uses the STP in it’s hydro energy forecast. That point is emphasized when you look at the 10 day forecast:
This pattern of bigger water in the front then tailing off has repeated itself for the last several weeks. Do they really believe that BPA will cut 2 gigs of flows next week? I don’t. More on the RFC in a later post.
Enjoy your weekend,
Mike