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Tuesday Sep 6, 2022   
News headlines across the country are noting the current power grid issues in California as a heat wave descends upon the state. The California Independent System Operator (CAISO) has sent out several notices depicting the resource shortfall for yesterday and today's delivery. Record breaking temperatures of over 110 degrees in the Bay Area have brought the peak hour demand for today up to 51 GWa. That is three GWa higher than yesterday indicating the grid will be short 2 GWa over the evening peak to meet demand obligations. Under that balancing scenario CAISO would have to utilize demand response as well as load shedding to avoid a grid catastrophe. This is a precarious moment for the entire West as any disruption to generation or transmission is likely to trigger rotating black ... » read more
Friday Sep 2, 2022   
This summer, the Operating Reserve Demand Curve (ORDC) has been quite active. In July, this was to be expected. July was particularly hot, which means more demand and strain on the grid as Texans use air conditioning to escape the heat. To contrast, August has been relatively mild, both in terms of temperature and demand. Despite the mild conditions, there has still been frequent price action in August. We’ll take a look at a a few days from last week that experienced only moderate demand but still saw significant price adders. Graph 1| LMP, ORDC and SPP, 8/21 – 8/27, ERCOT North Hub Above is a graph of ERCOT North’s locational marginal prices (LMP) shown in blue, the ORDC adder shown in orange, and the resulting settlement point price (SPP, the sum of the LMP and the ... » read more
Thursday Sep 1, 2022   
Conditions have been tight in the Pacific Northwest this week, as hydro flows have been on the decline to finish off the month while at the same time temperatures have soared across the region.  Flows into the US from British Columbia at International Boundary dropped to 80 kcfs as of Monday (down from 110 kcfs just last Friday) while the temperature in Portland reached 98 degrees yesterday.  This left Mid C trading more than $50 over SP-15 on Tuesday, reducing MW flowing out of the Northwest down into California over the transmission lines.  River flows at International Boundary appear to have settled down for the time being, which should help slow the hydro slide.  Now CAISO and the Desert Southwest are entering the mix, with the entire Southwest gearing up for a ... » read more
Wednesday Aug 31, 2022   
This summer, EnergyGPS has put out several market flashes on the heat wave and corresponding price spikes in Alberta. Over the last couple of weeks, the 15-day forecast has been awash in red for Calgary, Edmonton, and other western Canadian cities. Only over the weekend has the forecast toned down with red fading to orange as the month transitions to the beginning of September. As fall approaches, we’ll take a look back at how this atypical August compared to those in previous years. Just how hot was this year compared to previous summers? The figure below shows daily average temperatures for July and August over the last five years. This year is represented in the bottom panel with the second highest print on the board. Average temperatures for this August stand at 67.3 degrees ... » read more
Tuesday Aug 30, 2022   
Since the beginning of the injection season back in April the NYMEX continuous contract has appreciated from $5.70 to not the $10 mark. In that time there have been little to no supply/demand elasticity changes that could alter the end of October inventory balancing. Production is at the same level as it was one year ago. Power burns, with respect to the net load, are unchanged despite the change in underlying generation costs. And most important is that the end of October storage inventory forecasts continue to point to 3.35 TCF which would be a five year low and one of the lowest levels seen over the past two decades. There is limited time to find any method of loosening the current storage balancing dynamic. If it cannot be accomplished then the Lower 48 will enter winter with ... » read more
Monday Aug 29, 2022   
All eyes have been on the Colorado River this summer and discussions amongst the market participants as this water year has provided drought conditions for the second consecutive year.  The conditions have had a huge impact on water availability throughout the Southwest including hydropower production in the Desert Southwest.  This summer the elevation of Lake Mead has reached historic lows, after falling into a Tier 1 Shortage status in 2021.  This past May the elevation dropped below 1,050 feet, triggering the more severe Tier 2 Shortage status, which constitutes a drop from over 1,120 feet in late 2012 as shown in the figure below, a decline of over 70 feet in less than 10 years. Figure 1 | Lake Mead Elevation, 2010 – 2022 (feet) Over the past several weeks since ... » read more
Friday Aug 26, 2022   
Energy GPS Consulting recently completed two studies of the Pacific Northwest (PNW) market. These studies evaluate the potential costs and impacts associated with potential changes to the PNW hydro system. There are two important and significant changes being proposed. The changes are intended to increase the viability of salmon. One of the proposed changes would require increasing the amount of spill, taking water that otherwise would have run through the generators and diverting it to the spillways. The other proposed change requires the removal of the Lower Snake River Dams (LSRD). The spill rules would have an immediate impact. The breaching of the LSRD would likely not happen until around 2030. Certainly, these are complex issues which depend on the science surrounding salmon ... » read more
Thursday Aug 25, 2022   
Last week, the Bureau of Reclamation announced new cuts in water usage for Arizona, Nevada, and Mexico. The decision is based on their 24-month study that was released the same day. The study projects the elevation for the lakes behind two of the biggest hydro producers for the Desert Southwest region: Glen Canyon and Hoover dams. Both lakes, Powell behind Glen Canyon and Mead behind Hoover, have faced serious shortages in recent years as a megadrought has raged through the region for more than a decade. Both are at historic lows and could sink beyond the ability to produce hydropower if interventions are not made. The figures below show elevations at the lakes over the last 12 years, as well as the timing for passing important critical points identified by the Bureau. Figure 1 | Lake ... » read more
Wednesday Aug 24, 2022   
While the whole world continues to see higher prices in anticipation of a winter energy crisis particularly in Europe, there is one location that has not followed that sentiment. Over the past week maintenance outages on the Nova system combined with record levels of production have forced gas prices to seek much lower levels. The AECO cash price has sunk from $3 to only 15 cents. The price is the lowest of the past three years. During the summer of 2019 when a number of construction activities bound the Nova system there were regular price prints under 10 cents. This week's drop in AECO cash occurs while the Gulf Coast is posting near $10 per MMbtu putting the spot basis differentials at record levels.    Figure 1 | AECO and henry hub Cash for June-Aug 2022 (USD/MM) Most ... » read more
Monday Aug 22, 2022   
Mother Nature is delivering modest weather for the past couple of weeks and the latest 15-day forecast is carrying the pattern into the first week of September 2022, which means the Labor Day weekend is going to be somewhat cool across the country.  This is a bit different than what the Lower 48 experienced throughout June and July 2022 as temperatures were above normal for most of the country. Figure 1 | Lower 48 CDD Accumulation for 15-Day Forecast – Daily Despite the lack of power demand, we continue to see two things happen across the energy sector with the first being tied directly to the power demand profile; it is the lack of wind generation in key areas.  The two areas we continue to focus on are SPP and ERCOT as the swings in the hourly generation profile from ... » read more
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