WSI: Most Significant Heat Expected Across Plains and Rockies for Remainder of Summer

Transition toward El Nino Conditions & Persistence of Atmospheric Blocking Will Likely Keep Heat at Bay in Eastern US

Andover, MA, June 26, 2012 — WSI (Weather Services International) expects the upcoming period (July-September) to be slightly cooler than normal across the northeastern US, California coastal cities, and Florida, with above-normal temperatures elsewhere. The largest positive temperature anomalies are expected in the southern Plains and lower Mississippi Valley. The WSI seasonal outlooks reference a standard 30-year normal (1981-2010).

“So far in June, the most significant heat has occurred across the Plains and southern/central Rockies. The major cities of the eastern US have generally been wet and cool, with the exception of the notable, but brief, heat wave at the end of last week. Heading into July, we expect this general pattern to continue, with the biggest heat found in the Plains and Rockies and near to slightly above-normal temperatures across most of the East. We have increased our forecasted temperatures in Texas (ERCOT power region) for July, since it appears that continued atmospheric blocking at higher latitudes will suppress the summer ridge southward,” said WSI Chief Meteorologist Dr. Todd Crawford. “Further, it appears that a very dry, late June over much of the US may increase the odds for higher temperatures in many locations. Finally, the emergence of a new El Nino event will drive increased odds for below-normal temperatures across the eastern US as the summer fades into fall.”

In July, WSI sees the monthly breakdown as:
Northeast* – Warmer than normal
Southeast* – Cooler than normal
N Central * – Warmer than normal
S Central* – Warmer than normal
Northwest* – Cooler than normal, especially coastal areas
Southwest* – Warmer than normal, except coastal southern California

According to Chris Kostas, Senior Power and Gas Analyst at ESAI, “Mild July temperatures in the deep South and along the West Coast should combine with soft gas prices to keep power prices subdued in California and Florida. California and the Northwest will also benefit from above-normal Columbia River basin runoff, which should provide ample hydro generation this summer. Mild temperatures and softer-than-normal loads in West Texas will likely place downside pressure on power prices in that region, as well. Warmer-than-normal July temperatures are expected in the Central Plains, however, and should support power prices and implied market heat-rates in MISO and East Texas. Coal-fired generators in MISO will likely be able to increase output due to the strong electrical loads in July. PJM and Northeast power markets should see slightly warmer-than-normal temperatures which would increase electrical loads, power prices, and implied market heat-rates in those regions. Even though temperatures are not expected to be significantly above-normal in PJM, implied market heat rates could become volatile as coal-fired plants struggle to compete in this low gas-price environment. With natural gas production remaining stubbornly high, gas inventories well above seasonal norms and only slightly warmer-than-normal temperatures expected throughout the country in July; natural gas prices are unlikely to see any significant upside this summer,” Kostas noted.

In August, WSI forecasts:
Northeast – Cooler than normal
Southeast – Cooler than normal
N Central – Cooler than normal
S Central – Warmer than normal
Northwest – Warmer than normal
Southwest – Warmer than normal, except coastal CA

“With cooler-than-normal temperatures expected east of the Mississippi in August, natural gas prices could see some early autumn price weakness, as gas inventories approach last year’s record level. Below-normal summer loads usually translate into lower implied market heat-rates. But against the backdrop of very low gas prices this year (and increased coal-to-gas switching), implied market heat-rates could be firm as coal-fired generators continue to struggle against efficient gas-fired plants in a lower-than-normal electrical load environment. We expect implied market heat-rates will be steady but firm (particularly in MISO and PJM) due to below-normal cooling load and low gas prices. ERCOT, on the other hand, could see implied market heat-rate volatility due to the slightly warmer-than-normal temperatures expected in that region. California power prices are likely to remain relatively soft in August due to mild temperatures and soft loads,” Kostas added.

In September, WSI forecasts:
Northeast – Cooler than normal
Southeast – Warmer than normal
N Central – Cooler than normal
S Central – Warmer than normal
Northwest – Warmer than normal
Southwest – Cooler than normal

“A mixed forecast is developing for September. While weather-related demand drops off markedly in September, the possibility for warmer-than-normal temperatures in the South could combine with the start of generation maintenance in that region to boost implied market heat rates. In the Northeast generation maintenance begins slightly later. So a full generator fleet in September combined with mild temperatures along the northern tier of the country could help to depress power prices in PJM, NY and New England. Mild temperatures in California should also keep power prices subdued in September. Gas prices could soften in September as inventories exceed last year’s record level and approach 4,000 Bcf. Although we don’t expect inventories will reach 4,000 Bcf until October, it isn’t out of the question that this level could be breached as early as mid-September,” Kostas said.

WSI provides customized weather information to energy traders. It will issue its next seasonal outlook on July 24.

*To view the map defining WSI’s US regions, click here.

About WSI
WSI (Weather Services International) is the world's leading provider of weather-driven business solutions for professionals in the energy, aviation and media markets and multiple federal and state government agencies. WSI is a member of The Weather Channel Companies and is headquartered in Andover, Massachusetts with offices in Birmingham, England. The Weather Channel Companies are owned by a consortium made up of NBC Universal and the private equity firms The Blackstone Group and Bain Capital. More information about WSI can be found at www.wsi.com.

About ESAI
Since its inception in 1984, Energy Security Analysis Inc. (ESAI) has been dedicated to monitoring, analyzing and synthesizing information about world-wide energy markets. Tapping the talents of its senior-level staff, ESAI provides clients with unparalleled insight into where the markets have been and where they are headed. ESAI provides ongoing systematic analysis of energy prices in the oil, natural gas and energy markets. For more information on ESAI services, see www.esai.com.

Contacts:
Linda Maynard
WSI
(978) 983-6715
lmaynard@wsi.com

Tommy Sutro
Energy Security Analysis, Inc.
(781) 245-2036
tsutro@esai.com

Editorial Contact:
Barbara Rudolph
Rudolph Communications, LLC
(781) 229-1811
bjr@rudolphcommunications.com