- Mike Griswold
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Good Morning, The following reports reflect the energy impact of the most recent NWRFC STP.
- February - Up 499 aMW
- March - Up 226 aMW
- April - Up 333 aMW
- May - Up 1,337 aMW
Good Morning,It would be hard to come up with a more bullish WECC scenario than what I saw this morning. Bitter cold weather coupled with low gas storage, low hydro reservoirs, and gas pipeline constraints in both the northwest and Socal. But trading/hedging is not just a function of fundamentals; you also must consider price in your execution decisions. At a price, everything is a buy, and there is another, opposite price, where selling is your only choice. I'm not saying we're there yet, but with minimal liquidity, you need to be first out the door. It's like a fire in a movie theater with only one exit. The first ones through survive, unscathed, the last are burnt to a crisp.Today's market post will cover the four traded hubs for the BOM and Prompt and include the PROMPT-BOM roll.APT FrontWe will post in table order.Check out those collapsing heat rates while the price rocket launches itself into triple digits. We were buyers in mid-January and haven't posted a short sentiment since, until today. At $130, I'd liquidate my entire long position - not to a short position, merely be flat. I won, what's the point in doubling down? There is none, give the energy back to the utes, they'll need it, perhaps. FLATThe same chart for NP though not as bullish. That $30 inverted spread suggests north-bound flows for the rest of the month, doubt we see that.The spread is at an all-time low for any month anytime in the history of power. For that to pay (selling it) you'd need to see cash clear $29 MidC over every day of the month. Not likely, given cash is barely clearing over at the height of the bullishness:Today's spread cleared $1.00 higher at COB; not sure what the congestion pricing looks like from COB to John Day, but doubt it is $29.00. The largest COB over spread was Thursday for Friday where it cleared $8.00, not even close to what the BOM is going for. I'd liquidate the MidC BOM by flipping it to NP15, for size. BUY the Spread.SP and NP are the same, each has gas troubles, but the extra water will mitigate some of the pain. I'd own NP over SP given the Diablo fiasco and its proximity to MidC.Note the heat rates at Palo are in the 20ks while the other three hubs are sub 7k. Palo sees more of a Nymex-type gas price, in the 3s, and will be a significant exporter to the ISO, even though it is cold in Phoenix. What happens if the line fills up? Not a zero % chance, length here might be a shade to the risky side. But our play is up north. PASSMarch MidC made Ansergy's forecast looked ridiculous last month but oh what thirty days will bring. Now the market is over the forecast which merely is a SELL signal. Not that we'd want to be naked short today, but we'd be more inclined to reposition length. One way to do that is via the roll.We were sellers of this roll since mid-January. Now it is time to buy it back at $-87.50. OMG, that's nuts. I'd cover 100% of my short Mar-Feb roll at these levels, but that would still leave us naked long in March (we were buyers of that, too). Given there is only one door and the theatre is filled with a raging fire - we'd sell all our March length after flattening out the roll.March NP isn't ridiculously priced; it's barely back to the highs seen post-West coast pipeline explosion. Price-wise, that is, the heat rate is at a contract high. Still, the real pain may be this, or next, week, and we don't want any shorts. If anything, I'd probably take on some length at NP in March just to have a small lottery ticket in case this week truly becomes an Energy Armageddon.SP's March isn't at a contract high for either PP or HR, but why would it? Big water year which might see an early melt if this cold goes away, plus a chance of restoration of gas import capacity if Socal Gas should ever Magoo themselves into fixing something. PASSI'd have my finger ready to short March Palo but probably not today; not given the selling I'm doing at MidC. If the March's pullback, I'd jump on the train and short it here, but only after I saw the top.These rolls are anomalous, but so is the 14-day outlook. If something bad happens, which most likely would be this week, the roll could get cheaper. But I'd not want to wager against the powers that be (ISO, BPA, and Powerex). If anything, I'd wager they know what they're doing and will keep the lights on and the thermostats at 68. Given that, this roll could be worth $30-40 if you bought today.Same trade as NP, pick your poison.Note how the heat rate rallied, sharply, while the power price cratered evermore. Something is amiss at Palo and we'd probably want to own this roll.
Good Morning,Lots to write about today. From markets setting winter highs to Friday's flood control and toss in NOAA's relentless cold weather plots. 2019 is a winter that came late with a vengeance and has equally wracked both power and gas markets in cash but will also impact the forwards as Northwest reservoir levels are pulled (both gas and hydro) and California gas storage will exit the withdrawal season (March 31) at the lowest levels ever.Not much to add for that forecast aside from its cold, again, and that cold has seen a build in California.
NOAA's 8-14 Day as of Feb 10Let's use Sunday's 8-14 Day as our reference point.
NOAA's 8-14 Day as of Feb 7, 2019That's Friday's and see what I mean by California growing colder; the bitter dark blue now has spilled into LA, the entire Golden State is enshrouded in frigid blue.
NOAA's 8-14 Day as of Feb 3, 2019That was the outlook one week ago, on Feb 3. We were excited to see such cold weather, now look at what weather hath wrought.
NOAA's 8-14 Day as of Feb 10, 2018That chart is from a year ago, on Feb 10, 2018. We were probably doing handstands over that powder blue layered over Portland/Seattle.
NOAA's 8-14 Day as of Feb 10, 2017And 2017 puts today's weather in perspective. Two years ago the reality was potentially significant CDDs in the southwest and a rapid melt of low elevation snow in the Northwest. That latter is precisely what happened and drove late Feb and March to record flows, how times change.Just when we saw a price respite on Thursday, Friday's BOM shot to the stars, gapping up $45.00 at the MidC. But it wasn't just that hub, every traded hub rallied. It's like there is some massive virtual transmission line running from the MidC to Palo. I guess all the hubs grew a shade more bullish Friday, but Sunday's forecast is even more so. That said, these are some lofty values for the entire month, and if I were long, I'd be considering banking some of those profits - turning MTM to Cash. More on that in Part TwoPrompt, too, shot up and it should have given that storage (gas) is increasingly becoming a scarce commodity. The fear is this cold weather's grip on the WECC lingers, and at some point, there isn't enough gas. We already see something like that in the Northwest. Check out these gas noms for NW power plants:Freddy and Goldendale, each 7k heat rate plants, are idle! Idle in the most bullish winter event in a decade. Not because they aren't economically viable, they are, but because there isn't enough natural gas in the Northwest to run them. The decision has been made to shut-down these plants, so residential demand (gas) is not impacted. I guess the thinking is using the transmission lines to pull power north, out of California, and lean on the hydro system for the rest. That is what happened last week; the Northwest set a 30 year high for imports on Tuesday. Now, what happens when California may be beset with record cold? Does the NW continue to siphon off California's energy or do the lines stand empty? Plot thickens.Speaking of bogarting energy ...This caught our eye, flows on BC's Westcoast Pipeline. First, inflows at Hungtingdon BC set a post-explosion high last week, that's good, right? But that new-found largesse didn't make it across the border. Demand (imputed) in the Vancouver area set post-explosion highs, but the same wasn't the case for the Puget Sound area. That demand was lower than a month ago when it was warm! So much for being friendly neighbors, huh?These are the Day Aheads and a couple of points.
- Sunday for Monday set a winter high
- Congestion is non-existent, except for SP congesting INTO NOB! Never thought I'd write that sentence.
ConclusionsBullish, bullish, and more bullish. And we are growing nervous about length, doesn't make sense to be nervous about lenght all the while you're bullish on the fundies, right? More on that in the next post.
This weekly report, Change, summarizes how the week that just ended compares to both last week, and the same week a year ago. Through 1000 change records, we have filtered down to those that we found most relevant. [render_email_report name="Change - MidC" date="2019-02-09"]
Good Morning,Baby, it's crazy out there. LOLAPT MidC On PeakIn period order ....What else can you say? Short, you probably looking for a job; long, you probably looking to replace your Lambo. I'd stay long off of more cold coming, but this may pull back with a few days of "warming" but then its right back to low 20s for Seattle/Portland. I could also see this just going up more given gas becoming ever more scarce and streams freezing over rendering dropping inflows. We put out buys three weeks ago, and every post was a buy, so it is tempting to take some profits. That said, I'd be piggish here and stay long or add to the position.March is gapping up to the forecast which was high because STP was so low. The NWRFC hasn't tweaked its March numbers for a few weeks, but now we think they may need to back them down if BPA opens the Feb penstocks, which we believe they should and will. All that means is the regulated water the NWRFC placed in March will be shifted to Feb rendering the former that much tighter. BUYWow, this looks like the Westcoast Explosion-driven rolls from last fall. As odd as the chart seems, it probably is priced more right than wrong given strong certainty of extended Northwest cold in Feb and unknown March HDDs. We're long both so I'll... PASSApril took a beating in Monday's STP, and we wouldn't be too surprised to see next Monday's forecast shave another 500 aMW out of the month. Weather-wise, we know nothing, so this is a 100% water play. Both PP and HR at contract highs, but that is where they should be. Given more strong cash, potentially freaky strong cash, we'd stay long here, too.I'd be longer in March than April off of its proximity to Feb. The roll is still well above the forecast, and so we'd prefer owning the March over the April, but would prefer, even more, being long both.May, in our opinion, might be the only bearish bullet at MidC, fundamentally, After all, no flood control draft means no flood control refill. The water year isn't zero %, so there will be a freshet, albeit of short duration and minimal peak, but still think you'll see GCL inflows > 200 kcfs at some point in either May or June. Low snow depths typically drive earlier runoffs leaving May the most likely period of peak flows in 2019. Still, shorting anything in front of this monster bull seems reckless, and pointless. If you need VaR for the front, create it here.April is now premium to May, and it should be. For the reasons mentioned above, we'd sell more of this.The heat rate is cheap given the current state of the state. We like June for its implied SP/PV CDD calls and, with luck, the runoff peaks in May and BPA has to scramble to find the water to get full by the Fourth of July. BUYYou already know how we feel about the June-May roll. We like June more, but everything is a function of price. The roll is cheaper than it was six weeks earlier - when it was ridiculously priced - and we would buy this one.July's heat rate has taken off, and the price has barely moved which suggests some pent-up bullishness that may explode on to the scene, soon. I think some of the July "weakness" can be explained by the uncertainty of Socal Gas's summer supply, but now that the entire state is sucking gas out of storage like there is no tomorrow, there may not be a tomorrow in Socal, gas-wise. We'd buy this.We'd buy this too, but probably safer just to be long both.We'd rather own closer in than further out and think July is a better long than August. In a dry water year, July is August, so they should trade more flat than not. They're aren't flat. The roll is a lot cheaper, much less compelling of a short than it was a month ago, but the model says there is more room to fall, we agree. SELL.The poor man's summer is priced reasonably and is not on our radar screen ... PASSThe long party for this roll is over, and we have no position after going long at the bottom.
Good Morning,Baby, it's cold out there!And isn't getting warmer, any time soon. The markets have gone bonkers, power and gas.BOM is trading like an Hour Ahead market, prompt is showing strength.The LMPs are solidly set in the triple digits.Spot gas looks like BOM:Sumas is trading premium to Socal Citygate, but not by much. But the problem in the Northwest isn't just the Westcoast intertie, GTNW at Kingsgate is $15.00. All of which suggests gas and power are fighting for the molecules. Do you run the power plants and cut retail gas?Apparently not. Freddy isn't nominating on arguably the coldest weather Seattle has seen in a decade. Avista's peaker, Rathdrum, is running but not a 7k freddy! A battle over the molecules and residential heating load is winning. It's not like BPA couldn't use the power, either.Loads are up 2000 MWs at the ute, week-on-week, but hydro, wind, and thermals are down. Huh? Check out the Net Demand values - BPA finds itself 2000 MWs shorter yesterday than a week ago.This is the year-on-year for the week ending Feb 6. Only one week had higher loads but that's because we had but three cold days in the 2019 average, check this table next Monday. Contrast this year's hydro with 2010, the other cold year; same with Net. Baby, it's cold and tight out there.Fighting for molecules, both NP and MidC are setting winter highs; highs that blew out last year's tops.California blew past last year's peak sendouts; note the rallies in Receipts. Every intertie is pulling at max.So is every storage facility; remarkable that Socal set a post-Aliso storage withdrawal high yesterday - and we have 14 more days of this, per NOAA. JP is also withdrawing at near capacity, but now the worry is running out of gas. California combined storage is at a record low. No wonder spot gas is rallying, but if the weather holds, stays cold, those $22's' might be $44s next week.Power demand across the WECC soared yesterday off of last week's weak levels. Watch these charts, they should come off over the weekend, then soar again at the start of the next business week. The system will have no time to recover and this deep freeze is literally freezing the rivers in the Northwest and BC further adding bullish fuel to our raging winter fire. Long ain't wrong.Seattle at 21, and that's SeaTac, about three miles from the Sound. The eastside suburbs are in the teens, that's as cold as it has been in a dozen years. Vacaville froze, 29 degrees, and San Jose posted a 35 for its low. Burbank didn't get below the 40s but probably will next week.Great timing for PG&E, taking its nuke down for refuel amidst the most bullish strip the bankrupt ute's seen in a decade. Nice work on that schedule.Renewables are mostly AWOL in the locales where you need the power. MidC is becalmed and getting no wind love from its turbines, neither did NP15. Could you imagine a world where the coal was all retired in an event like today?February is the start of the ISO's winter maintenance season and gas outages are at season highs. Not sure how much that will matter if they can't get the fuel to the plants.These are the EIM flows and prices for the last couple of days for Powerex and Puget. Check out the string of max sales for Powerex, they hit their limits on more hours than they didn't. Puget has mostly been a buyer, at any price, though they did get some sales off at the peak.Let's change gears for a minute and talk about tomorrow's Flood Control. The NWRFC posted an 86% of normal for TDA's Apr-Aug and that would suggest a Coulee draft to 1261, Libby to 2441, and Hungry Horse to 3532. In other words, there really won't be a draft. Or, if there is a draft, it will be in February to serve load leaving March and April holding the bag.That 86% is fishy given the Jan-July is just 82% and NOAA is just normal for the next two weeks. 2019's fireworks have just begun, unless the PNW realizes some monster storms like California just did.Now the state's water suppies are around 140% of normal and the April-June dynamics are changing as in getting more bearish.This is wierd. Coulee's discharge through its turbines is off, week-on-week. Odd, because I'd have drafted a few feet out of the pond to serve load and sell into these triple digits, but hey, that's me. BPA didn't, they cut flows in the face of the highest winter prices in a decade. The only explanation I have is the ute fears what's coming in the next two weeks and is saving bullets, which would be the prudent thing to do. Still, a bird in hand...Another problem all Northwest hydro-owning utes are facing is freezing rivers; flows are down because the rivers aren't flowing, they are now ice skating rinks, at least the streams flowing into the rivers are either icy or iced.Aside from regulated drafts at Williston on the Peace, most of BC's stations are off, week-on-week.The 100% regulated mainstem Columbia and Snake are unchanged. Whatever water is arriving is going through the turbines, there just isn't enough coming in, or not as much as BPA would like.You can see some of BPA's desperating (and exasperation?) by the change in flows at Albeni Falls. The ute started pulling down Lake Pend Oreille to manufacture a few scanty bullets, but the flows on the Kootenay (Libby) or Clark Fork (Horse) are well below averages. No wonder, many of the side flows in the hinterland are frozen solid, check out these indexes.At first I thought the scrapes were failing but then I realized those drops in the last day or two were stations falling off due to ice. These indexes are the marginal fuel for 30,000 MWS of northwest hydro and they are going the wrong direction - heading to zero. Isn't WECC power fun!Cal reservoirs are a bright light in an otherwise dark cavern. BC's combined storage is racing to a record low while BPA clings to every KAF like its their lifeline - well it is their lifeline but at some point the ute is going to have to use some of that storage to serve load.The ISO is laughing thanks to its largesse of water; total hydro energy is soaring. BPA can only grimace in painful envy.Those Powerex buys from a week ago look pretty nice now. But the real oddity of today's posts are the negative flows on the DC and AC. The ISO is now serving MidC's loads. Hallelujah, it's about time. Tuesday saw the largest imports into MidC from the AC in 23 years!The previous record was set on Jan 25, 2013 when the AC sent 841 aMW into MidC; yesterday blew that value out of the water with its 1490 aMW flowing north. I mean, that number, 1490, is off the charts and this took place when California was scrambling to serve its own loads. It was like a 3000 aMW swing in NP net demand - and PG&E is taking its nuke offline for a refuel. Ooops.
ConclusionsBaby, it's bullish out there. More on that in Part Two.
Good morning, NOAA Forecast ImagesThe looming (or in many places already present) cold snap is here to stay, at least for another two weeks. The Northwest and especially Montana will get the brunt of low temps, but virtually the entire western half of the country will see below-normal temps over the next two weeks.Precipitation ForecastWhile this cold snap is on our mind in the interim, it's the precip mixed with cold weather that we'll be interested as we move into spring. The Northern Cascades are trending normal to slightly below normal for most of the forecast, while the Sierra Nevada and virtually all the Rockies should see above-average precip.LMP SpreadsSP-PV DA prices continue to rocket as cold weather looms ahead. Day ahead prices reached $123 yesterday for PV and $117 for SP, while NP hit an even higher mark at $127.FuturesCrude had a bit of a crash yesterday with prices falling $1.38 day-on-day to reach $54.02. Despite the drop, crude remains higher than any point in January.Gas prices were much more subdued yesterday as natural gas increased just a penny and only showed three cents of movement at its peak. At $2.66 gas remains at one of its lowest points since last April.Natural Gas - TermMarch SP15 has been flat since Jan 25th, and while no other hub saw dramatic changes since that time, most had slightly higher increases (around 3-4%).WECC Gas DemandGas demand is up in all four hubs since the beginning of the month, but especially so in NP where 1.1M MMCF was added over the past two days, good enough for a 42% increase. Mid-C is up 300,000 MMCF since February 1st but saw demand fall 100,000 MMCF over the past two days.Gas StorageJackson Prairie storage shrank more than 2,000 MMCF since the beginning of the month as cold weather began to take its toll on supply. This change in storage was highlighted by yesterday's 633 MMCF withdrawal, the heaviest in more than five years.
HydroPNW ReservoirsArrow made a slight uptick yesterday as the reservoir added a foot of elevation day-on-day, marking the first increase since mid-January in the process. Albeni Falls made a temporary 0.2' increase over the weekend but has since dropped back to the level it has held since late October.Week-on-Week Snow AnomalyNP and stacking up snowpack after another round of heavy snowfall over the past week brought the Sierra Nevada toward 125% of normal. The Northern Cascades can't seem to get their footing on normal snow levels as cold weather isn't being accompanied with notable precipitation. The majority of the Rockies gained enough snow to be comfortably within a normal range.Snow Depth SummaryLower Granite led the way with 2.59" week-on-week and just over an inch from the past three days. Most snowfall was concentrated east of the Cascades, and this is best illustrated by Wash West's paltry 0.01" of snowpack gain over the past seven days.Snow Depth ChartWash West's snowpack stagnated on Jan 23rd and hasn't hinted toward a recovery since. The deviation from average moved from just 0.5" to 4.0" over the same span of time, and now the hub sits above just two snow years over the past 13.NP Snowpack Anomaly by StationThe story remains the stark contrast between the Truckee and the Klamath rivers. The Truckee is showing all its stations with at least 116% of normal while the Klamath fails to top out above 100% in all but three of its stations, including the Gerber Reservoir with just 6% of normal snowpack.Precip ForecastThe Northern Cascades can't seem to build their snowpack fast enough to catch the average line, and this precip forecast isn't driving confidence in the trend changing any time soon. Days that were expected to bring heavy precip have been mostly withdrawn, and days that should produce snow won't amount to much.Contrast the Cascade's forecast to S. Lake Tahoe's boom or bust precip projections. The 9th could bring more precip in a single day (1.35") than what Seattle forecasted for the next week.
DemandMid-C DemandSeattle is projecting highs to fall 10 degrees below normal, but the real story is taking place at night with temps plummeting to 20 degrees below average and bringing the chance to see teens for the first time this year. Temps will eventually return to normal, but that isn't projected until at least the 16th.Portland doesn't show as much of a deviation from normal as does Seattle, but temps should still drop close to 15 degrees from average overnight.Spokane could see single digits Friday night, enough for 23 degrees below average. Next week may be even colder as 3 degrees is slated for the 13th.Demand soared, as would be expected with the first Northwest freeze of the winter. Loads jumped more than 4,000 MW day-on-day Monday and another 600 MW yesterday.NP 15 DemandNP peak demand was flat day-on-day with just 60 MW making up the difference yesterday, though loads were up close to 600 MW week-on-week.Last night may have marked the coldest night over the next two weeks as temps came dangerously close to the 32 degree mark. Overnight temps are expected to slowly creep back up into the 40s by the weekend but won't cross back into the normal range until next week.Sacramento is projecting a low of 31 late tonight, enough for 14 degrees below normal, and the coldest mark in the forecast.SP-15 DemandSP peak demand dropped roughly 100 MW yesterday in the day-on-day comparison but rose 500 MW week-on-week.Burbank isn't exempt from the cold spell sweeping the rest of the west as temps fall into the 30's each of the next two nights. Overnight lows fall 12 degrees short of average, while most highs are 13 degrees shy of normal. We aren't projecting a normal high until the 19th.PV DemandOvernight lows in Phoenix are dropping into the mid 30's for both tonight and tomorrow night, both registering 15 degrees below normal. Daily highs should struggle to reach 60 until Friday and may not top out above average until the 13th.Salt Lake will drop into the mid to low teens during the same span of time, look for a low of 14 on the 14th.
FundamentalsNuke StatusDC1 dropped to 99% capacity yesterday.RenewablesSP-15 solar hasn't topped 5,000 MW in more than a week and has only reached 4,000 MW once since the beginning of the month. Yesterday reached 3,655 MW.Mid-C is wind managed a peak of 2,263 MW on the 2nd, but it was short lived as the wind seem to come in a single burst that lasted just a couple hours. Lower levels were maintained over the following two days, however.ISO Gas OutagesISO gas outages climbed from 3,430 MW on the 2nd to 5,133 MW as of yesterday, the highest total in more than a month, and just in time for the coldest weather of the year.
TransmissionBPA TTC COI cancelled its TTC increase to 4,125 MW and instead maintains a 3,400 MW line. Note the temporary drop to 3,175 MW on the 12th as well.NOB once again didn't report any changes to TTC over the past week. Have a great day, William
Good Morning,Ansergy can now customize your home page to incorporate any set of reports you prefer. The default is a Mid-C cash-centric home page. Here is an example of an SP15 version:Every user in your firm can have their own, from cash/real-time to term, for any of our 14 power hubs. We can also create a custom-emailed report around your home page theme that you'll receive each morning, pre-market.Drop Garrett or Bill a note in chat or email if you'd like them to tweak yours. You also have the ability to modify these and we'd be happy to show you how to do that.Team Ansergy
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Good Morning, The following reports reflect the energy impact of the most recent NWRFC STP.
- February - Up 378 aMW
- March - Down 129 aMW
- April - Down 1,117 aMW
- May - Down 527 aMW