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Wednesday May 15, 2019   
There have been a number of changes to both supply and demand that have created a very loose balancing condition for most of this spring. But we are now starting to see the tide shift in the other direction. Cash prices have been supportive in Texas and the Gulf over the past few days despite the return of several generation units from seasonal maintenance. Lower production along with higher net load are tightening the natural gas balancing. As we move into next week we see only tighter conditions. The results should mark a bottom in the natural gas pricing before we transition to summer.  It first starts with production. The increase in volumes this spring have been particularly bearish for basis prices in West Texas. Record low daily indices have now started to weigh ... » read more
Tuesday May 14, 2019   
Over the past couple of years now, we have had the privilege of interacting with Randy Hardy on a monthly basis as he makes his way down to Portland for other business.  In recent conversations with him, he has been discussing the future capacity markets in the Pacific Northwest.  In today's blog we have decided to publish both Randy Hardy and Larry Kitchen's findings as it will be a point of discussion at a conference being held in Portland tomorrow.   The article is attached to this thread for you reading pleasure.   ... » read more
Monday May 13, 2019   
If you are a basketball fan, the two Game 7 conference semi-finals were flat out amazing as the Portland Trailblazers came back from being down by 17 points to win on some clutch shooting by CJ McCollum and free throws by Evan Turner.  Over in the East, the showdown between the Toronto Raptors and the Philadelphia 76'ers turned out to be even better as Kawhi Leonard hit a fade away 20 footer over the 7 foot 1 inch Joel Embid as the clock stuck 0:00 to win by two points.  If you watched the game live, the shot was one of the most amazing in the history of basketball as the high arch made its way to the rim where it hit the front, bounced up, hit the back base, bounced a third time of the iron only to hit the rim one last time before seeing the ball go through the net.  Game ... » read more
Friday May 10, 2019   
On May 8th, ERCOT released the final Seasonal Assessment of Resource Adequacy (SARA) for summer of 2019 and updated Capacity, Demand and Reserve (CDR) report (http://www.ercot.com/news/releases/show/181248). These are ERCOT planning documents about expected future demand, supply, and the resultant reserve margins. There is a lot to unpack in these documents – what projects have been completed, what the changes in generator’s plans are, and other topics. One variable that stands out to me is the focus on demand. ERCOT is forecasting significant demand growth over the coming years, between 2.5-3.0% per year. Nonetheless, reserve margins continue to inch up in the short-term, thanks to new renewables, uprates from existing generation, and the return to service from mothballed ... » read more
Thursday May 9, 2019   
As NYISO continues through outages season, the moderate temperatures have kept demand on the lower end shifting the brunt of generation away from the thermal stack. With generation returning to the grid, the Zone G LMP fell to the $19 level for Wednesday even lower than the weekend print. While the looseness in the market has decreased Downstate pricing, we are seeing a different story upstate. Zone A has one of the strongest price on the board with day-ahead clears in the mid $30's throughout this week. The higher Zone A clears point towards congestion coming out of Niagara, however, weaker prices Downstate have exacerbated this issue. Figure 1 | Niagara Falls Hydro electricity from Niagara is the largest generation source in NYISO Zone A. However, the 230 kV lines do not have quite the ... » read more
Wednesday May 8, 2019   
I remember making the transition from being a high school math teacher to working my first days on a trading desk.  My head was spinning with the terminology that was being used on a daily basis.  This was back in the day where acronyms such as the PX or the ISO RT were being discussed as markets within California.  Not a day went by where the abbreviated version of the Mid Columbia (Midc) or the Desert Southwest (DSW) made their way into the conversation of spread trades tied to the SP-Midc or SP-PV markets.  The final straw was when the hydro guy whipped around the terms kcfs, MAF, HL, LL and ultimately STP.  I thought to myself, what kind of language are they speaking and when you saw it on paper, it looked like Alphabet Soup. Figure 1 | Alphabet Soup as we ... » read more
Tuesday May 7, 2019   
This past Friday, SoCal Gas posted another update to their maintenance and construction plan. The plan was to restore the ruptured 235-2 line that connects the Needles delivery point on the SoCal Border into their system prior to this summer providing some additional capacity for the peak cooling demand. Once that was restored, the company would focus their efforts on other pipeline inspections in the area. The goal is that all restriction to be lifted by this coming winter. Recent inspections of the 235-2 line have exposed additional corrosion problems which will take additional time to mitigate. This is the third time the line has been delayed with the return date being pushed back to June 21st. Each time return date is pushed back it calls into question the ability ... » read more
Monday May 6, 2019   
Over the years, the Renewable penetration has been quite impressive across California , Texas and parts of the Plains where SPP and MISO have a strong hold on the actual footprint.  Growth presents hiccups along the way in the form of transmission constraints to the influx of supply where curtailments are in order for the grid to balance.  The one market that has seen their curtailments pick up this year has been CAISO as its solar penetration is massive from both behind the meter and utility scaled facilities. Figure 1 | CAISO Utility-Scaled Solar Breakdown The graph above details the utility-scaled solar within CAISO by month/year.  The bottom pane represents the monthly average output with the bars while the line graph is the cumulative max generation from the inception ... » read more
Friday May 3, 2019   
If you have been following the West over the past few years, the one think you have to come to realize is expect the unexpected.  This is especially true when you consider Southern California has endured the Aliso Canyon storage facility leak, massive renewable penetration and natural gas pipeline constraints that led to SoCal Edison ridding their balancing area of any economic power burns last summer.  Up in the Pacific Northwest, the region got a taste of pushing power burns offline as the Enbridge pipeline (British Columbia) had an explosion that disrupted the flows From the T-South compressor down through Sumas and eventually drained Jackson Prairie and Clay Basin storage over the winter months. Since the end of the winter strip, the Pacific has done nothing but put gas ... » read more
Thursday May 2, 2019   
Portland is near perfect weather right now with highs hitting just 70 degrees while the sky is bright and sunny. However, the pessimist inside of me questions whether a good thing can last forever with summer just around the corner. The days will continue to get longer causing temperatures to continue to work their way upwards. Before you know it, summer will make its way onto the board bringing cooling demand along with it. Generation is well aware of this shift with facilities beginning to make their way back from outage. Looking at the Northeast, nuclear units have begun to return to the grid while current outages are also expected to come back over the course of May. The PJM outage schedule is finally showing a dip at the beginning of May with generation making its way back online. » read more
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