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Monday Jan 3, 2022   
The Midwest and East are having a bit of winter, which is something our friends to the north have been dealing with for the majority of December.  During that period, both Alberta and British Columbia were seeing record temperatures hit the region along with heating demand.  The Pacific Northwest fell into that bucket between Christmas and New Years while California finally got some precipitation in the form of snowpack in the Sierra Mountains. Figure 1 | Sierra Mountain Snowpack Level The graph above details the Snow Water Percent as of April 1 for the northern region of California, which includes the Sierra Mountains.  As you can see from the red line, the month of December 2021 was impressive as there were two vertical upticks with the last one taking the current water ... » read more
Thursday Dec 30, 2021   
The current weather pattern across North America could not put Alberta and Texas at opposite ends of the temperature spectrum as the former continues to see well below normal daytime highs while the latter tinkers with some cooling load on certain days during the later afternoon hours.  As a result, we continue to see record natural gas numbers tied to heating demand in Western Canada while the South Central region is illustrating just how warm it has been by sending moderate price signals to market participants in both the day-ahead and real-time markets. Figure 1 | ERCOT Net Load and North Zone Day-Ahead Price – Hourly Yesterday’s blog focused on the Alberta power market where today’s will focus on the ERCOT landscape as we turn the corner and put 2021 in the ... » read more
Wednesday Dec 29, 2021   
The close of December has been one for the record books for Albertan power and gas markets.  Extreme cold has generated new all-time highs for demand while putting the squeeze on supplies, leading to sharp commodity price rises (in the case of power, going as high as they can).  Not only does this week present the potential for more, but longer range forecasts indicate it may be awhile before brutal cold gives Albertans a break. It all starts with weather.  A couple of weeks ago, a potent Arctic air mass began descending southward into Alberta.  By this past Sunday, Edmonton temperatures were plunged down to new all-time record los of -44˚F (-42˚C).  15 municipalities across the province also recorded new record lows.  On Monday, Calgary’s average ... » read more
Tuesday Dec 28, 2021   
One of the biggest issues in the Western states last year was the dramatic drop off in snowpack and run off into the river systems. It is an ongoing issue with drought conditions that have developed over the past two decades. The lack of streamflow caused the hydro projects in California and the Desert Southwest to draw down elevations to all time lows. Operations along the Sacramento and Feather Rivers in Northern California were taken to zero mid summer as all reserves were used. Around the clock hydro generation fell by 2-3 GWa from previous years putting the balancing burden on the grid squarely on the natural gas dispatch. But as of recent there has been a change in the fortunes. California has been hit by some big storms allowing a rebound in the snow water ... » read more
Monday Dec 27, 2021   
The West continues to get the gift that keeps on giving from Mother Nature around the holidays.  The gift we are talking about is the age old weather pattern that brings with it colder temperatures and plenty of snow/rain depending on which part of the region you live.  For example, Portland Oregon has been blanketed with snow on the streets the past two days while Seattle has its steep city road shutdown due to icy conditions.  The further north you go, the colder the overnight lows become with Western Canada in the thick of a three week stretch where Alberta’s forecast is nothing but deep purple (indicating well below normal temperatures). Figure 1 | Snow in the Stands – Seahawks vs. Bears If you are a football fan and turned on the television in the Pacific ... » read more
Thursday Dec 23, 2021   
Another holiday season is upon us where one of the traditions is to exchange gifts amongst the family, neighbors and friends alike.  It all starts with the foundational holiday tree and decorations that give the home a look and feel that is like no other. Figure 1 | Holiday Tree Lighting The next step is to figure out which gifts to buy for whom as the list can get out of hand quickly.  This year is a bit different as the concept of supply chain short has come into play as many of the items on the wish list are out of stock or will not be able to ship EVER!!!  As people scramble to keep the boxes showing up at the front door via Amazon, UPS and/or the US postal service, the stress of each showing up in time is endless it seems let alone worrying about any of the boxes ... » read more
Wednesday Dec 22, 2021   
Since summer we keep finding ourselves in disbelief over how high European and Asian gas prices have become.  Yet, each time we wonder how much higher things can go, prices just rip upward.  Back in October, forward contracts for the winter strip trounced record highs, more than doubling in value from where they opened September trading.  As the summer wound down, forward prices for Winter ’21-’22 eased off.   As winter got underway, though, some of the premiums got priced back in.  In the past two weeks, an astounding confluence of headline news and market fundamentals has propelled European forward prices to stratospheric and previously-unimaginable highs.  That these steep and frequent ramp-ups keep occurring has now sufficiently ... » read more
Tuesday Dec 21, 2021   
Over the past three years PG&E has been actively trying to get rid of some of the key assets on their system. In the aftermath of several bankruptcies and liability settlements the incumbent Northern California utility is seeking ways to save costs and reduce operational risk. Part of this plan is a radical idea to minimize the use of storage capacity. This has been outlined in the latest rate case. Last year they retired two key caverns at Pleasant Valley and Los Medanos. This June they voluntarily cut the working capacity on the rest of the cavern complex, which is largely McDonald Island, by 51 BCF. Figure 1 | PG&E Utility Storage Capacity for 2017 - 2021 The retirement of the two caverns and the cut of working capacity reduced the total system storage by a total of 74 ... » read more
Monday Dec 20, 2021   
The weekend brought the largest snowflakes to the Portland area I have seen in my life and that is saying something since I grew up in Wisconsin where there was plenty of white stuff falling from the sky during my childhood.  The reason for the larger than normal flakes was due to the simple fact that the jet stream brought precipitation in the form of rainfall near sea level while the elevated portions of the region saw plenty the snowpack accumulation continue to increase.  Early Sunday morning saw the temperatures dip down around the freezing level for a few hours in/around Portland to which the rain turned into a wet snow; hence the size of the actual snowflake grew to where it sort of felt like a wet miniature snow flake blankets were falling from the sky.  Figure 1 | ... » read more
Friday Dec 17, 2021   
Electricity prices in ERCOT have been on a general downward trend over the past month and a half.  Comparing average monthly real-time LMPS at ERCOT North hub over the past several months, the average price dropped from $48.77 in October down to $41.95 in November and even further in December, averaging $28.81 through the 16th of this month.  These changes have been driven by two different factors: first, falling natural gas prices in ERCOT, just as they have fallen across most the United States in recent weeks.  Second, ERCOT has moved lower in its supply stack due to decreased net load.  The implied heat rate for ERCOT North decreased from an average of 9.8 in October down to 8.9 in November and 8.6 so far in December.  Solar and wind generation in ERCOT were at ... » read more
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