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Tuesday Jul 24, 2018   
Over the past several weeks, the West has been the topic of discussion with many in the marketplace as Los Angeles Department of Water and Power saw record loads and some isolated blackouts post 4th of July.  Last week, the major transmission highway between the north and south was derated (Path 26) due to an unplanned maintenance outage as well as the Desert Southwest recovering from its monsoon type weather where some key transmission towers toppled (within SRP's balancing authority) due to high winds. Figure 1 | Toppled transmission towers in SRP due to high winds All this got the party started as SoCal Border's cash started to get lively as the marginal megawatt sat in the Desert Southwest as the likes of Pacificorp was buying for their load in their East system as well as ... » read more
Monday Jul 23, 2018   
Last night my seven-year-old son and I went to a Portland Pickles baseball game.  For those of you not in the know regarding this powerhouse baseball squad, the Pickles are part of the West Coast League (WCL), a college wood bat baseball league.  Pretty much this league is where good college players come to play during the summer to keep their skills honed.  While this is no Major League Baseball, it is great baseball, and when you throw in $10 tickets for the seats from where Figure 1's picture was taken, and $3 beer/soft drinks/hot dogs, I will buy the WCL/MLB value spread all day long.  Anyways, as we sat there watching the game, the Corvallis team hit a couple early home runs on us that got my son asking me how they hit the ball so far.  I told him that the ... » read more
Friday Jul 20, 2018   
We are in the full swing of summer, and that means it is fire season. Last weekend I rafted 50 miles of the Deschutes River in Oregon from Warm Springs to Maupin. The Deschutes River drains the Oregon Cascades running south to north before feeding into the Columbia River just above The Dalles Dam. The 500 kV DC lines running from The Dalles to Los Angeles are close to the Deschutes in this part of the state. Just a few weeks ago that portion of the Deschutes was hit by several wildfires, including the Boxcar Fire depicted below. The landscape along the river for most of my trip was charred. We saw a lot of wildlife, presumably hanging out close to the river where there was still plenty of vegetation. Figure 1 | Boxcar Fire in Central Oregon along Deschutes River In recent days the fire ... » read more
Thursday Jul 19, 2018   
Since the founding of the United States of America, we have seen a struggle between the East and West. From squabbles over which coast is the leader in industry with tech in the West and our finance centers in the East, to city residents arguing over which side of town to live. Looking at PJM, the East/West divide is ever present with new natural gas fired plants popping up in the East while the West is mainly comprised of large coal generators. The West Hub is situated right in the middle of PJM between Ohio coal and coastal gas generators which has resulted in an interesting tug-of-war. Looking at Figure 1, we can see that the West Hub LMP reflects this as it generally sits between the East and AD Hub LMPs. Figure 1 | Select PJM Hub LMPs PJM covers a vast geographical area ranging from ... » read more
Wednesday Jul 18, 2018   
The time is now in the Lone Star state as the power demand numbers are ready to move up another 2-3 GW during the later afternoon hours.  This is due to continued extreme heat hitting the Dallas and Austin areas while Houston is finally joining the party as its daily average moves up into the low 90's for two days. Figure 1 | ERCOT Daily Average Temperatures for Major Cities - Actual and Forecast As a result, the ERCOT Day-Ahead clears have been moving up with Wednesday's hubs sitting around $350 across the heavy load.  If you look at the hourly price profile for the North, the later afternoon hours have moved up from the $841 mark yesterday to over $1,500 for today. Figure 2 | ERCOT Day-Ahead Auction Settles - By Period The Prices(Changes) section to the right (Figure 2) ... » read more
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
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