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Monday Jul 2, 2018   
If you grew up in the 80's Eddie Murphy was front and center as one of the top comedians in the industry. It was his box office hit Beverly Hills Cop that put Detroit back on the map as well as moonshot his career. Figure 1 | Beverly Hills Cop - Cast Members The plot of the movie is tied to a Detroit cop by the name of Axel Foley takes personal vacation time and go from Detroit to Beverly Hills to investigate his friend's murder.  The twist is Axel is in some hot water of his own as a sting operation a couple months prior went sour and caused quite a bit of damage to where his boss on the Detroit force threatened to fire him unless he changes his way on the force.  That did not stop Axel as he landed in Beverly Hills and started, in fact as the plot thickened Axel was back to ... » read more
Friday Jun 29, 2018   
Back on May 25th, the Energy Newsletter discussed the capacity power markets across specific ISO's across the country by referencing some Scooby Doo analogies, where the PJM market was characterized as Fred.  If you have watched any episodes of the show/cartoon, Fred is a consummate professional, from the way he handles dealings with the clients of the gang to the final reveal of the villain. Every activity is paced out and deliberately performed. He gets the job done. This describes the PJM capacity in a nutshell as its market has been around for a long time and seems to be working from a holistic standpoint.  In our most recent Newsletter article, titled "Living in Indeterminate Times: Capacity Performance Obligations Kick In at PJM", we take a look at how the first ... » read more
Thursday Jun 28, 2018   
Getting up for the markets in the Pacific Time Zone is hard enough when you are used to it but when your body is acclimated to Hawaiian time, the 3:30 am alarm is basically 12:30 am.  It took a couple of double takes when I started looking at some of the key fundamentals in the market as it seemed my browser tabs were frozen in time as nothing seemed to change.  Below are a couple of the key components that stuck out to me: Natty | the prompt month of the natural gas futures was basically the same as when I left where the July contract was just under the $3.00 mark.  I did keep an eye on it as I was basking in the sun as it shifted down into the low $2.90 level only to rebound. Figure 1 | Natural Gas Prompt Month Daily Settle As we move forward, the breakthrough element ... » read more
Wednesday Jun 27, 2018   
Since the beginning of June, we have noticed the Mass Hub heat rate shifting between 9,000 and 12,000 MWh/Btu even with a similar amount of thermal generation on the grid. With Brayton Point retired, only smaller less efficient coal generation is left on the system which hasn’t seen much action yet this summer. While some oil was called on for the 18th, it was less than the oil generation at the beginning of the month and was unlikely to have caused the high print for the day. This points to differences in the gas stack driving summer heat rate volatility. Figure 1 | Mass Hub/AGT Implied Heat Rate While plant efficiency is a logical place to begin disecting the differences in natural gas generation, facilities in New England hover around the 7,500 Btu level with only a small ... » read more
Tuesday Jun 26, 2018   
For much of the past two years we have dedicated much of our time deciphering the issues around the Southern California gas market. The Aliso Canyon debacle combined with long overdue maintenance has created a perfect storm for a reliability concerns. Due to the anticipated scarcity issues, SoCal Gas delivered prices have jumped for this summer. PG&E values have made a similar move in sympathy with the southern part of the state. But the rise did not correspond to the rest of the curve. In fact the Q3 PG&E strip moved well above the Q1 2019 value providing ample incentive for natural gas storage operators to withdraw their gas inventory this summer. This is contrary to the demand trends for the Pacific Gas and Electric system. Due to space heating load the gas consumption ... » read more
Monday Jun 25, 2018   
Most traders in West Power go out of their way to avoid the regions east the Pacific Northwest and California, and north of the Desert Southwest.  This includes the "markets" in Idaho and Montana, down through Wyoming, Colorado, and Utah.  Most of these markets are avoided because their liquidity is dreadful, with utilities that for the most part show a $15/MWh bid/ask, leaving any speculative trader that dared to dabble in these regions in a spot to get his teeth kicked in daily until said position is closed.  Mona, the main point of delivery in Utah, and the topic of today's newsletter, not only has the aforementioned dreadful liquidity, but it has another aspect that is even more scary: the ability to price above every other point in the WECC.  As a result, only the ... » read more
Thursday Jun 21, 2018   
Temperatures started to move above normal over the course of this weekend with Monday reaching the high watermark at 93 degrees in Columbus, Ohio. The rest of the Northeast was not far behind as Boston and New York both moved into the high 80s. As people cranked up their AC units, demand across the regions rose as well. Looking at Figure 1 we can see a red blob covering the entire northeast for Monday. Figure 1 | Historical Temperature Anomaly for June 18th The rise in temperatures caused electrical demand to hit its high so far this summer. With the hottest weather in the PJM region, the West Hub LMP rose to $64.19, head and shoulders above the rest. Looking at figure 2, we can see a cascading effect as LMPs settled a bit lower as you move north. Figure 2 | Select Northeast LMPs for ... » read more
Wednesday Jun 20, 2018   
Aloha, from the island of Oahu!!!  Over the past couple of days my family and I have been able to hangout in Honolulu while our son's soccer team participates in the FarWest Regional Tournament.  On our first full day, local friends took up to the North Shore where we got to drive past the Dole Plantation Factory (we did not stop and take a tour).  A little further up the two-lane road, over the tall stalks of grass that shielded us drivers, was the first glimpse of the new regime on the island. In the distant stood anywhere between 15-20 wind turbines, nonchalantly spinning as the wind blew off the Pacific Ocean and up the hillside. Figure 1 | Oahu Wind Farm   The push for renewables at the utility scale level was making an impact on the views to which many of the ... » read more
Tuesday Jun 19, 2018   
Coming into this week there were big expectations for power burns. The net load was expected to soar from 471 to 511 GWa which at face value should have produced the highest power burns of the year. But we noticed something different about yesterday's net load to power burn relationship. Gas consumption remained relatively flat despite the material gain in power demand. The original forecast was showing power burns climbing to over 35.5 BCF per day but the realized burns only measured 33.7 BCF. The implication was that there was another generation source getting dispatched ahead of natural gas once the load moved up to levels usually seen in July and August. Figure 1 | Lower 48 Net Load and Power Burns for the Past 20 Days Coal generation still remains a significant premium to natural ... » read more
Monday Jun 18, 2018   
Every year the water year in the Pacific Northwest is different.  Not only is the cumulative volume of water that goes through the various dams within the river system different each year, but so is the timing of when the snow melts and hits the rivers.  Further, every sub-region of the PNW (Snake basin, west side, Willamette Valley, Above Grand Coulee, etc) receives different volume and timing of their respective flows.  All of this said, at some point every year each region's runoff comes to an end.  As you can see in Figure 1, flows at The Dalles are coming off hard, a strong indicator that this year's runoff is nearing a wrap.  Figure 1 | Outflows at The Dalles (KCFS) From a generation perspective, as seen in Figure 2, hydro generation has fallen from a peak ... » read more
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