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Thursday Nov 19, 2015   
This is the first in a series of three newsletters related to the COI. One of the most important assets in the western electricity markets is the intertie connecting the Pacific Northwest’s Lower Columbia River system to Northern California.  The 4800 MW line, known as the California Oregon Intertie (COI), consists of three jointly owned 500 kV AC lines from Oregon to northern California which together are recognized as Path 66.  These lines come together at the Malin and Captain Jack substations located in southern Oregon – collectively these ... » read more
Wednesday Nov 18, 2015   
Yesterday morning, I awoke (2:30 am) to gusting winds prior to sitting down and starting my day.  The first thing that came to mind; is my trampoline still in my yard?  I say this because it was only 11 months ago when I was flying back from a conference in New Orleans via Los Angeles when I call from my wife stating that our trampoline is up against our neighbors house.  Now, what you have to know is our house is south facing, we have a hedge that is 12 feet in the air and the neighbors house is 120 ft away from where the trampoline was to begin ... » read more
Tuesday Nov 17, 2015   
The rally in the alley for the front months of the Nymex contracts has all but gone away this morning and the early morning trading is down $0.08, putting the December contract at the $2.30 mark. This was exactly where it was prior to the weather forecasts showing colder weather moving into the Midwest and some parts of the Ohio Valley in the 6-10 day period and extending into the 11-15 day timeframe. Figure 1 | NOAA 6-10 Day Weather Forecast Coming out of the weekend, the pre-market open on the Nymex has the front months up another $0.07.  Once people got ... » read more
Monday Nov 16, 2015   
As the forecasts started to show some colder weather moving through the West and Central part of the country last Friday, the prompt month Nymex contracts shifted up $0.08-0.10. Figure 1 | NOAA 6-10 Day Forecast It is ironic that it was not until the blue weather pattern started to take shape that the nuclear fleet units started to return to service as Saturday saw a big shift down in the MWs offline, especially in the Eastern part of the country. Figure 2 | Nuclear Plant MWs Offline - Daily The trend continued on for Sunday and this morning, when NRC reported ... » read more
Friday Nov 13, 2015   
As we start to move into the back half of November, it is worth taking a look at the front half to see how the landscape has changed compared to September and October.  If we recall, both September and October still saw the lingering effects of the high ridge that sat over the Pacific Northwest parts of the spring and all summer.  This equated to nice sunny days, little wind and moderate load across the region.  As the beginning of October, the Nob line went out of service as they finish the final leg of the Ceilo transformer upgrade project.  The ... » read more
Thursday Nov 12, 2015   
With the move down in the natural gas market at the end of last month, all the chatter was about the next wave of coal to gas switching that will be occurring in the market as the ratio between coal prices and the prompt month natural gas price shifted up to levels seen last spring. Figure 1 | Coal to Gas Switching Ratio As you can see in Figure 1, once the November contract went off the board (at $2.033), the new prompt month (December) has brought the ration down around the 18 level, not the 20 some level in Q2. The real question at the time was how much switching ... » read more
Tuesday Nov 10, 2015   
Conditions have changed quite a bit in the PNW over the last couple of weeks.  The once dry and cracked ground is now damp soil as rain storms have consistently moved through the region.  With fall conditions in full swing we are seeing renewable generation in the PNW take control of the market.  This week’s wind forecast in combination with a healthy hydro system will significantly offset gas fired generation and drive down energy prices.  Figure 1 | PNW Hydro generation YoY - 24 HR Ave The PNW hydro system has benefited the increase ... » read more
Monday Nov 9, 2015   
Over the weekend, Diablo Canyon Unit 1 started to ramp back up after being offline for over 4 weeks due to refueling. Figure 1 | NRC Nuclear Outage Change This combined with in-state wind picking up for today, helped push the SP15 implied heat rate down to an 11.53 across the heavy load hours.  This is using weekend gas, which settled in at $2.13 at Socal Border.  Friday's SP15 implied heat rate was closer to 12.0, so the 1/2 point is directly due to ramping of Diablo Canyon Unit 1 and wind generation. As you can see in the graph below, the morning hours ... » read more
Friday Nov 6, 2015   
With this week's EIA number posting a 52 BCF injection, the question I have is simple, should that be read as bullish or bearish. Figure 1 | EIA Weekly Storage Number The market took it as a bullish signal as it came in roughly 5-7 BCF below expectations and was below levels seen last year at this time.  As a result, the front end of the curve shifted up $0.102 on the day, leaving the December contract at $2.364.  Some of the people in the bullish camp are also pointing to the fact that this number is low when you take into account the mild weather that was ... » read more
Thursday Nov 5, 2015   
As we enter the first full weekend of November 2015, ERCOT saw a glimpse of the net load profile as wind within the ISO footprint averaged over 10,200 MW yesterday.  With temperatures in the low 70's across the state, the existing load profile was already expected to be flat to Monday. Figure 1 | ERCOT Net Load - Hourly As you can see in the figure above, the massive increase in wind over the past few days has shifted the net load profile down to levels seen during the weekend of October 24th/25th, which is well below what hit the grid on Monday. When you look ... » read more
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