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West intertie capacity raised with Bootleg Fire containment, thermal still strong

Highlights

Bootleg Fire is the largest active wildfire in the US

Cal-ISO imports up 12.7 points since AC outage

SoCal city-gate cash three times higher on year

The high-voltage alternating-current transmission intertie connecting Pacific Northwest energy resources to California load pockets has increased capacity to 4.6 GW as conditions with the Bootleg Fire have progressed to allow the blaze to be 46% contained.

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"Conditions with the Bootleg fire have evolved and BPA raised the transfer capacity 4,600 MW at 2 p.m. [July 26]," BPA Spokeswoman Maryam Habibi. "We based the decision on reports on the ground, the fact that we've seen no issues with the lines since service was restored last week, and predicted fire behavior. We are still monitoring the fire and realize that conditions can change quickly."

California Independent System Operator imports fell to an average of 7.1% of the total fuel mix July 9-12 when the Bootleg Fire knocked out the AC and DC lines that send power generation from the Northwest into California. The drop in imports, which typically make up about a quarter of the ISO supply, led the grid operator to declare a Stage 2 grid emergency after the loss of about 5.5 GW of imports.

The AC line tripped July 10 and by July 14 was back in service able to carry up to 3 GW. Line capacity is 4.8 GW.

Cal-ISO imports have averaged about 13% lower year on year so far in July at 136.420 GWh/day, with thermal generation filling in the gap, up 44% year on year so far this month to average 308.235 GWh/d despite higher gas prices in 2021, according to ISO data.

Gas guzzling

The strong call on gas-fired generators to ramp up in times of stress on the grid — whether from heat waves or loss of power imports — has boosted regional spot gas prices this summer compared with last and contributed to their relative volatility.

SoCal Gas city-gate cash has averaged $6.28/MMBtu so far in July, more than three times above the $1.89/MMBtu average for the same time last year.

While tighter supply-demand conditions across US gas markets have lifted spot gas prices nationally, Southern California spot gas prices have consistently traded at a premium to other regional markets.

The SoCal city-gate's spread to cash Henry Hub has ballooned to around $2.50/MMBtu for July 1-26, up from averaging just 20 cents last July.

Some of the Southern California gas market's buoyancy reflects the region's current capacity restrictions on pipeline inflows. Several key entry points for Permian and Rockies gas coming into the SoCal Gas system are undergoing months-long maintenance work, including Line 4000 in the Northern Zone, that will continue into September.

Power price punch

Higher gas prices have driven up power prices. SP15 on-peak day-ahead locational marginal prices have averaged around $70/MWh so far in July, an increase of 30% month on month and a jump of 130% year on year, according to ISO data. Likewise, NP15 on-peak day-ahead LMP has averaged about $68.25/MWh so far this month, up 26% month on month and an increase of 151% year on year.

Power forwards across the West reached record highs in June on summer supply concerns. SP15 on-peak August has decreased 12% month on month to average around $142.25/MWh so far this month, which is still 257% higher than the 2020 package a year ago, according to S&P Global Platts data. Similarly, NP15 on-peak August has averaged about $126.50/MWh so far this month, down 12% month on month, but 239% higher than its 2020 counterpart a year ago.

Weather wrath

The Bootleg Fire, which started July 6, has burned 400,601 acres as of July 25 and is the nation's largest active wildfire, according to the National Interagency Coordination Center.

"The progress that we have made is due to the continuous, vigilant work by our crews," Joe Hessel, Incident Commander for the Oregon Department of Forestry Incident Management Team, said in a July 25 update. "Severe fire weather conditions and extremely dry fuels continue to challenge us on this fire."

Containment lines on the eastern side of the fire continue to be improved by removing smoldering fuels from the

fire's edge, according to the July 25 update. On the west side of the fire, containment lines continue to hold and are being patrolled.

Wildfire concerns remain across the West, with dozens of wildfires, primarily across northern California and the Northwest, continuing to burn through hundreds of thousands of acres of timber, brush, and grass, aided by hot, dry conditions, dry soils, and ample fuels, according to the US Drought Monitor.

There is an excessive heat warning in parts of the Northwest, with temperatures in the 100s, and several regions have air quality alerts due to wildfires, according to the US National Weather Service.

The region's reservoirs continue to sit below normal levels with the lack of precipitation and increase power demand from ongoing above-normal temperatures.

"In California, 154 primary intrastate reservoirs gained just 1.7 million acre-feet of water during the 2021 melt season, barely 20% of the historical recharge average of 7.9 million acre-feet," according to the US Drought Monitor. "At the end of June, the 154 reservoirs held just 62% of their typical volume for this time of year — and had lost 16.6 million acre-feet of water (49% of the original volume) over the last two years."