Wet start to March improves hydro outlook, dry six- to 10-day forecast could reverse trend

The Dalles Dam water-supply forecast has risen above year-ago levels on higher snowpack levels in early March, pulling down power forwards, but precipitation is forecast below normal in the near term, which could reverse the trend.

"Some precipitation in the Rocky Mountains, central Utah, and Nevada, as well as the Pacific Northwest, did help with seasonal snow values, reversing a dry trend that most areas have had," according to the latest US Drought Monitor's weekly drought summary. "In California, there are many who fear that the snowpack has peaked for this season at 61% of normal, which will lead to further drought issues later on."

While some areas saw improvements to drought levels, extreme drought conditions expanded over portions of southern Oregon and northwest Colorado, according to the weekly drought summary.

Southern Idaho is having pretty severe drought conditions, Bureau of Reclamation's Joel Fenolio said during the March 16 Technical Management Team call.

The six- to10-day outlook indicates a greater probability for below-normal precipitation across the West, while the three-month outlook indicated above-normal changes in the Northwest and below-normal changes in the Southwest and Southern California, according to the US National Weather Service's Climate Prediction Center.

Water supply forecast

The Dalles water supply forecast is currently at 99% of normal for the April-September forecast period, up six percentage points year on year, according to Northwest River Forecast Center data. The water supply forecast year runs from Oct. 1-Sept. 30.

The region had a normal start to the water year, followed by a drop in January because of dry conditions.

The Dalles serves as the barometer for hydro conditions in the region. Less hydro generation in the Pacific Northwest translates to less generation available for exports to neighboring regions.

"The Dalles is one of the few projects that can strip gas out if you put more water through that spillway," a Technical Management Team member said during the March 16 call.

Spot gas prices at Sumas in the Northwest has averaged about $4.061/MMBtu so far this month, down 5.2% from the February average and 64.4% higher year on year, according to S&P Global Commodity Insights data.

Hydro generation

Hydro-powered generation levels are trending higher so far in March.

Hydro has accounted for 78.9% of the total fuel mix month to date in the Bonneville Power Administration footprint, up 8.9 points year on year, while all other fuel sources decreased, according to BPA data.

In the California Independent System Operator footprint, hydro has averaged 6.7% of the total fuel mix so far this month, nearly 2 points higher year on year.

Shasta Dam in Northern California is currently at 48% of normal for the April-July forecast period, according to the California Nevada River Forecast Center, where water supply forecasts are ranging from 6% in northwest Nevada to 63% in central California.

Forwards fall

Power forwards trended higher in February as The Dalles water supply forecast fell to as much as 7 points below normal because of a lack of precipitation leading to below-normal snowpack levels across the Pacific Northwest.

But precipitation in early March brought some relief to the hydro outlook, pulling down power forwards.

Currently, Mid-C on-peak August is in the upper $140s/MWh, down $20 from the package high of $167.55/MWh Feb. 23, according to S&P Global data. The 2021 package reached a high of $229.90/MWh June 23, 2021.

The Mid-C on-peak July package is in the low $80s/MWh, down $22 from a package high of $105/MWh reached Feb. 23, according to S&P Global data. The 2021 package reached a high of $194.90/MWh June 23, 2021.

The June package is in the mid-$30s/MWh, down $6.70 since late February, according to S&P Global data. The 2022 package reached a package high of $44.958/MWh June 16, 2014, while the 2021 package reached a package high of $63.25/MWh May 21, 2021.