The huge winter storms in California and out West produced a significant snowpack across the region and increased lake levels, setting the stage for major hydropower generation this year.
Yet analysts say the boom in hydroelectricity could further depress power prices, which might be good news for rate payers but bad news ultimately for independent power producers, or IPPs.
"The more hydro generation you have the less [natural] gas generation you should have," Citi analyst Anthony Yuen told CNBC in an interview.
He expects hydro generation on the West Coast to be stronger year-over-year due to this year's abundant mountain snowpack. Although California hydro generation is unlikely to match the Pacific Northwest, he said it "should still be much better than prior years due to stronger precipitation there."
Late February snowfall levels and water content in the Pacific Northwest "are running at or slightly above average," according to Tony Usibelli, special assistant to the director of energy and climate policy at the Washington State Department of Commerce.
California's Sierra Nevada mountain snowpack stood at 188 percent of normal statewide as of Wednesday, according to the state Department of Water Resources data website.
"We do expect more in-state hydroelectricity to be available in summer 2017 than last year," said Steven Greenlee, a spokesman for the California Independent System Operator, which operates the high-voltage grid for most of California. "In-state hydropower production was significantly less during the most recent drought years."
California also imports hydropower electricity from the U.S. Pacific Northwest region. Washington State, both the largest producer and consumer of electricity generated from hydroelectric dams, doesn't consume all of the hydropower produced so the output is sold to utilities throughout the region.
Swami Venkataraman, a Moody's senior vice president and analyst covering utilities and power, said competition from more renewable power over the last four to five years — wind and solar in particular — has resulted in power prices that "have been very depressed. So this is [comeback in hydro is] going to worsen that problem."
In particular, the Moody's analyst said the increased hydropower generation is "definitely a negative" for IPP companies such as Houston-based Calpine, which has exposure to California gas-fired plants.
"Increasing renewables penetration and more recently and temporarily increased levels of hydro generation have severely weakened the energy market," Trey Griggs, president of Calpine Retail, said during the company's fourth-quarter earnings call earlier this month. "However, we're starting to see signs of improvement in the outlook for resource adequacy markets, reflecting the increasing value of well located, reliable, dispatchable assets like ours."
CNBC reached out to Calpine for further comment about hydro impacts.
At the same time, some see the improved hydro outlook as particularly positive for Northern California public power utilities such as Silicon Valley Power, Sacramento Municipal Utility District as well as other public utilities with hydro-generation assets.
"Utilities will definitely benefit from the lower cost of power," said Matthew Reilly, an analyst at Fitch Ratings who covers the public power utilities. "A lot of them had to purchase power on the market [in drought years] to replace shortfalls in hydro."
PG&E, the large investor-owned utility based in San Francisco, also could benefit from a resurgence in hydropower.
In a normal rain year, PG&E can get about 15 percent of its total power needs from hydro, according to spokesman Paul Moreno. But in a low-hydro environment such as drought years he said it was sometimes half that amount.
California's hydro production usually increases during the spring snow melt but production historically peaks during summer months when there's generally more power demand.
Overall, there are nearly 290 hydro-generation plants in California, with many located in the Sierra Nevada mountains. There also are some hydroelectric facilities located in Southern California, including the hydro plant at San Gabriel Dam located in the mountains northeast of downtown L.A.
Shasta Dam, operated by the U.S. Bureau of Reclamation, is the largest hydro plant in California. At full capacity the Shasta plant's five huge generators are capable of producing up to 710 megawatts of hydropower, or enough to power more than 500,000 homes.
As of Wednesday morning, Shasta — located in the upper Sacramento River region of Northern California — was generating power and also releasing water from one of its spillways as the reservoir stood at 93 percent of capacity and 130 percent of its historical average.
Similarly, many of the state's other major reservoirs are at or above seasonal averages for this date.
"Because the primary purpose of the reservoirs is flood control, not hydroelectricity generation, the amount of generation cannot be estimated until flood control releases cease," said Albert Lundeen, a spokesman for the California Energy Commission.
That said, previous wet years in California could provide clues as to how 2017 will turn out in terms of hydropower generation in the state.
Indeed, Lundeen said historically "wet" years such as 2006 and 2011 resulted in California producing hydroelectric generation ranging from 40,000 to 50,000 gigawatt-hours, or just over 20 percent of the in-state electricity generation. By comparison, the drought year 2015 resulted in only about 13,000 gigawatt-hours generated from hydro, or just 7 percent of in-state electricity generation.
"If hydro, say, goes back to something on the order of 15 percent, you're going to see a lot of excess supply of power because demand is not growing as much," said the Moody's analyst.
Then again, Venkataraman agrees it may be "too early" to determine how the situation will play out. "The real impact on [hydro] generation is seen when the snow melts — and that tends to happen in the spring and the summer."
Meantime, the hydropower plant near the base of Northern California's Oroville Dam is currently offline after major erosion damage this month to the dam's concrete primary spillway resulted in the channel in front of the plant backing up with debris. The dam's emergency spillway also suffered significant erosion problems after the reservoir exceeded capacity Feb. 11 and activated the back-up spillway for the first time ever.
"What we have to do is clear out the debris from the diversion pool, the area below the spillway," said Chris Orrock, a spokesman for DWR, the state agency owning and operating the Oroville facility.
Orrock said crews won't be able to attack the debris problem until outflows from the swollen reservoir start to lower.
"We can't get the flows much lower until we're at a position of the storms coming in and out that we feel comfortable turning off the water at that spillway," the state official added. He said the goal is to get the Oroville hydropower plant's turbines back online "as soon as possible."
If the Oroville dam continues to stay out of operation into the summer, Goldman Sachs expects there could be some upside for Calpine, which it said has "a sizable portion" of its power plant capacity in Northern California.
"CPN's near term benefit would likely come from an increase in volume at summer peak or in future years, if the Oroville plant remained offline, given the existing hedging of prices that CPN currently maintains," Goldman analyst Michael Lapides wrote in a research note last week.