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Tuesday Jul 17, 2018   
A lot of time has been spent on the Southern California gas market issues this year. This is for good reason. The region has reliability issues due to storage and transportation outages that are causing the supply to be severely constrained. This has largely overshadowed the dynamics that are playing out in Northern California. The two rate cases that were negotiated with the CPUC over the past ten years has caused a number of structural issues on the system that seem to be coming to a head this summer.  PG&E had quite a few cost increases go through as a result of the rate cases. That has led to a dramatic increase in transportation prices into and through their system. As a result, the long term contracting for transport services has continually dropped which puts a ... » read more
Monday Jul 16, 2018   
When people throughout the country think of the Pacific Northwest (PNW) it is my belief that they imagine Washington, Oregon, Idaho, and Montana.  At least growing up in the region that is what I always thought of when I heard a reference to the PNW.  In the power markets however most traders think of the PNW, or rather, MidC, as Washington and Oregon, with bits of the Idaho panhandle thrown in for good measure (Avista loads).  This is the region folks look at for calculating the MidC load associated with its supply/demand balance, using transmission flows to/from British Columbia, Montana, Idaho, Wyoming, and California to finish off the MidC's equation.  Estimating the flows to/from these other regions is always difficult, and best done with a production cost model ... » read more
Friday Jul 13, 2018   
It seems like ERCOT is in a bit of a re-setting mode right now in both the short term and the long term markets. Buyers and sellers are like tired boxers in the middle rounds of a 12 round bout. They are circling, jabbing, trying to figure out the next move as the summer months unfold. Prior to where we are at, February through June 2018 saw the ERCOT August On Peak contract be the premium US electricity product – the belle of the ball. This was due to the Coal retirement announcement in October combined with some high prices in early January/February 2018 when the units actually went offline and the Polar Vortex hit the Lower 48, including Texas.  Such events triggered the August contract to shift from around $100 up to $180 per MWh. A few price spikes during ... » read more
Thursday Jul 12, 2018   
Last week was record breaking weather in the Northeast as a heat wave passed through the region. The beginning of the week ISONE was expecting temperatures to cause high levels of demand and brought back as much generation from outage as possible.  This kept the Mass Hub real time LMP at a discount to the day ahead, and it looked like the grid had this locked down with weather runs showing cooler weather on the 5th coming out of the holiday. However, market participants were in for an unpleasant surprise as they returned to work on Thursday. The forecast had quickly shifted with temperatures heating back up driving highs back into the 90s. Figure 1 | Boston Temperatures Actual and Forecast Thermal generation throughout the ISO fired back up to levels seen before the holiday. Looking ... » read more
Wednesday Jul 11, 2018   
The last 36 hours in Portland Metro area have been filled with clouds and a little breeze that has kept the cooler weather intact.  As I walked to get a cup of coffee yesterday afternoon, the sun started to peek out from behind the clouds and it was then that you realized just how how it can get in the Pacific Northwest during the month of July (and August for that matter).  As it stands right now, Mother Nature has the weather forecasters calling for daytime highs to be in the mid-90's on Thursday and staying in the low 90's all weekend. Figure 1 | Portland's Daily Weather Forecast - Actual/Forecast This prompted the Midc heavy load bilateral market to shift up to $39 for today (Wednesday) after indexing $26 for Tuesday.  The shift up was substantial but still pales ... » read more
Tuesday Jul 10, 2018   
Besides day to day fundamentals coverage, EnergyGPS provides several forecasting tools to help determine value in the natural gas futures market. One of our client's favorite is the Natural Gas Balance Sheet as it takes a forward looking assessment and forecast of the major supply-demand components across the Lower 48. We assess production, imports, exports, LNG and ResCom demand to provide a monthly storage balance that extends out 18 months. Figure 1 | Sample of the Energy GPS Natural Gas Supply/ Demand Balance Sheet As you can see in the figure above, each component mentioned above is laid out in a format that has the supply as a positive number while the demand is negative to the grid.  Over the past decade, the grid has reshaped itself several times as the demand has outpaced ... » read more
Monday Jul 9, 2018   
If you are a National Basketball Association (NBA) fan, you are aware that LeBron James has committed to play for the Los Angeles Lakers as he signed a 4-year contract right after free agency began.  This is a big deal as he is noteably one of the best players of all-time and still has alot of life in his basketball career. Figure 1 | LeBron James's is a Los Angeles Laker - Jersey #23 if you followed the story, it was not much after midnight on the first day of the NBA free agent courting period when LeBron and the Lakers general manager Earvin Johnson (goes by the name 'Magic', you mihgt have hear of him).  When they sat down for a three hour conversation, I am sure there was a lot that was covered from a basketball operations standpoint as well as getting to know each other a ... » read more
Friday Jul 6, 2018   
Every year at the end of June I coordinate a decathlon of leisure sports which is held in beautiful Sisters, Oregon. While the rest of the world is focused on the World Cup or Wimbledon, thirteen brave, fading, middle-aged men compete in a 15-hour marathon of events designed to test one’s breadth of experience, basic fitness (but not more than basic), mental stamina, coordination, and the “eye of the tiger.” Figure 1 | The author receives the "Yellow Jersey" after the first event in the 2018 Aluminum Man Competition I’ve published a recap of this event for the last few years. A number of readers have told me it is their favorite newsletter of the year. I’m not sure exactly what that says about our readers’ interests or the quality of the other 250 ... » read more
Thursday Jul 5, 2018   
The 4th of July night sky is filled with fireworks across the country.  Some are set off by the neighbor who deems this holiday as their favorite and has gone out and purchased a large stash of explosives that make for a great display.  Other displays from from the neighborhoods within a city or by the city itself.  Here in Portland, the combination of the three existed into the later hours of the night as you could hear the block parties pick up around dusk.  The Sellwood neighborhood always has a nice display of fireworks while the likes of St Johns and the City of Vancouver always get a crowd.  The main event is tied to the Portland Waterfront Blues festival where music is played all day and is capped off with a big display of sparkles lighting up the ... » read more
Tuesday Jul 3, 2018   
In previous Newsletters we have discussed the supply/demand issues that SoCal Gas will face this summer. There are ongoing maintenance outages across their system that are limiting the flow of supply into their system to just 2.6 BCF per day. On top of it, the largest storage cavern on their system has been restricted as a last resort source of supply. It is only to be used when reliability is at risk. These supply problems are not much of an issue when the system demand remains low. There is adequate supply from the adjoining pipelines to meet the sendouts. The problem arises when the temperatures drive heating or cooling load above the available capacity rating of the system. This past spring has been rather mild with only a handful of days in the LA Basin reaching over 90 degrees. This ... » read more
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