Winddown

Good Morning,

As the year winds down, we are winding up for next year. Lot’s of exciting developments will take place over the next couple of weeks starting with the first Flood Control guidelines. More on that later, let’s see how loads fared over the holiday weekend:

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Consistency can be a virtue, in the case of loads, it was a virtue if you were short. Across the WECC loads plummetted off of rallying temperatures; nearly every station has a higher low:

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Lake Tahoe realized a slightly colder low, week on week, while the east-side Mid-C stations saw 15-20 degree rallies. Interesting that Portland was sideways, no change and still a chilly 28 for a low. We would have been jumping up and down a month ago to post a 28; now it barely warrants notice. Perhaps because the market is still flush with energy and prices are uneventful:

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The Day Ahead market is off from a week ago, but then so is gas:

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The Rockies are off $.40/mmbtu while PG&E is unchanged and the Mid-C is (Stanfield) is in the middle; off $.0.19. With loads dropping it is no surprise the Day Ahead is off.


Demand Forecasts

Hub Summary

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The Rockies are the only hub to see warmer temperatures, week on week, everywhere else is a shade cooler and half the hubs are above normal.

Mid-C Minimum Composite

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The most recent outlook has hints of new cold over the next weekend, nothing crazy cold, just colder than normal. Also, note the big water heading towards the MidC – this is a new system that is just showing up and nearly every day gets splashed. Check out those New Year’s Day storms falling on the coldest days – epic skiing in the northwest. Me, I’ll be watching the Huskies stomp Bama.

Portland, OR

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Portland dips back below freezing beginning on New Year’s Eve, which is also when it will begin snowing in the City of Roses; by the time you need to head back to work on Monday, it will be a raging blizzard, if you believe the above forecast. But our concern is your daily commute, and how awful it will be in Portland next Monday, it is on WY17. All of this precip heading towards the northwest is teeing up the hub for some big snow rallies on bumps in its water supply outlook, all falling right before the first Flood Control. Plot thickens.

Sacramento, CA

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Cool in the front and warmer throughout the forecast; and another big storm scheduled to rain on NoCal’s New Year’s parade. C’est la vie.

Burbank, CA

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Some cooler weather next week and hints of extended cool out two weeks, don’t bank on it, too far out for most mortal weathermen/women.

Phoenix, AZ

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The desert gets some very nice weather (red circles) and also has those Burbank cold hints on the back; not a lot to say about PV’s weather, it’s mild and going nowhere.

In closing the demand section, let’s take a look at month-to-date degree days (realized):

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Bullish in the north, bearish in the south. Dec should close out one of the better ones, degree day-wise, at the Mid-C.


Hydro

We mentioned it is getting wetter at Mid-C and NP15:

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The Rockies, however, are mired in a drought and your ski trip there should be canceled, re-book for somewhere less glamorous but snowier, like Schweitzer or Big Mountain.

Station Precip

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Wow, three inches plus at Portland and Seattle, and some of that may come down as snow in both. Spokane is poised to get an inch, and it already has nearly a foot of snow on the ground. All of this new water is going to come down as snow and water supply is going up:

001-watsup-ihr 001-watsup-gcl 001-watsup-tda

We’re not publishing the RFC by itself anymore, because we don’t think it’s a good prediction of where water supply is at, usually. Lately, there has been a convergence towards our numbers, and it seems there is a consensus that TDA is very close to normal, 98% per the RFC, 100% per us.  The lines flip at Coulee, we are slightly below the RFC, but both are about the same as TDA; and the Snake are identical. What isn’t identical are the standard deviations for the two forecasts – the RFC’s SD is off the charts, ours barely registers.

Flood Control guidelines will be released in two weeks, and it looks like they will be based upon normal which would suggest drafts to the 1235-1245 at Coulee, though we still don’t know if the Bureau is going to perform maintenance on the dam’s drum gates.  January should be safe from drafts, but Feb-April warrants caution. Coulee is under 1280 today so much of the pain has been drafted to meet last week’s loads, and with the more cool weather over the next week, even more pain will be avoided.

Perhaps the biggest Mid-C hydro news is the drafts to meet loads, in both BC and the Northwest:

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Mid-C is now beneath its five-year average, in fact, is lower than any of the last five years. Call that bullish for Q1, maybe bullish for Q2 but with normal to possibly above normal snow it may be moot for the latter. All of this drafting has put a lot of water in the system, and with the persistent cold there hasn’t been a chance for BPA to let up on its drafts – the rivers are flush with water:

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Flows on the mainstem remain above the five-year averages though they have backed off from last week (see Demand above). We see signs of a general tightening in water – take the Clark Fork as an example. Avista is passing just 16k CFS; we’re sure they’d love more water but its just not there. Probably from a cold month and the rivers are icing up, and nothing is melting – that trend shall continue for another week, at least. Makes Jan looks juicy.

Our SideFlow indexes reflect the same:

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The Mid-Col index is almost bone dry; nothing is coming out of the Cascades; all of the indexes are off from a week ago, and all are well below the five-year average.

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BC’s rivers are a similar story – regulated drafts are filling the rivers while the smaller, run-of-river, are drying (freezing) up.

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Most of the California rivers are also backing down, but look at what they did to Shasta yesterday – cranked it up to almost 10kcfs, nearly double from a week ago. No clue what went on there yesterday, but that is a lot of water and put the project at close to hydraulic capacity.


Transmission & Generation

The ISO outages are about the same:

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Outages are off 2000 MW from last week and unchanged from last Friday.

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The Etiwanda unit is the only new outage worthy of note.

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And nothing returned that mattered. Transmission is a bit more impressive:

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Flows out of ZP reversed direction yesterday and went south, not north. No idea why, it just did.

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The Canadians backed off their exports over the weekend by sending about 400 aMW less to the Mid-C (versus the weekly average).

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And the AC exported more, so did the DC:

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All in all, net, there was about 800 aMW less energy in the Northwest due to these changes in exports.


Conclusions

  • January
    • 001-traderank-jan
      • We don’t see any compelling buys or sells, but we like the cool weather in the Northwest, we like the big drafts that have taken place on the reservoir, and we like the declining natural river flows
        • Mid-C long (HL or LL)
        • SP15 – we are long here, too
  • Feb
    • 001-traderank-mc-feb
    • We like owning the Feb, too,  for all the same reasons we like Jan; as long as cash stays tight, and why wouldn’t it? Feb may be immune from Flood Control impacts, most of the draft will be upstream at LIB and HGH; the Coulee draft won’t happen til later in Feb giving us 30 days to find a day to puke out the length.  LONG
    • SP – long too, outages are so low they can only go up, plus we like the cold weather (hints) in week two
  • Q2
    • 001-traderank-mc-q2
    • It’s trading at a 90 day high (price-wise), and we see snow cumulate, maybe it is time to take a stand and short this one? We all know how nasty April can get as BPA drafts, sometimes drafts into the melt. …SHORT (and long the spread).