WSI: Summer Heat More Common in the Western U.S., with More Seasonal Summer Weather in the Eastern U.S.

Latest Data Suggests a Reprieve from the Big Heat of the Last Three Summers

ANDOVER, Mass. (May 21, 2013) — WSI (Weather Services International) expects the summer (June-August) to be cooler than normal across parts of the Great Lakes, Ohio Valley, and Southeast, with above-normal temperatures common elsewhere, especially in the western United States. The WSI seasonal outlooks reference a standard 30-year normal (1981-2010).

According to WSI Chief Meteorologist Dr. Todd Crawford: “After three very hot summers in the central and eastern U.S., it appears that the summer of 2013 will be a bit more merciful. Significant changes in North Pacific ocean temperatures and the drought signal suggest that the biggest heat will be focused in the western U.S. this year, allowing for more seasonal temperatures across the central and eastern U.S. Although we do not expect either an El Nino or a La Nina event to develop this summer, tropical Pacific sea surface temperatures are generally warmer than they were during the very hot summers of 2010 and 2011. Warmer temperatures in this region typically produce atmospheric patterns more conducive for cooler summer temperatures in the eastern/central U.S. Further, the particularly large warm pool of water in the Northeast Pacific is also typically associated with cooler summers. Finally, heavy early spring rains have dampened drought concerns across areas east of a Minneapolis-Kansas City-Dallas line, easing drought concerns a bit there. The dry conditions are now generally confined to the western U.S., which increases the odds of big summer heat there. Finally, there have been persistent trends in recent climate model forecasts towards a hot summer across the West and a cooler summer across parts of the eastern U.S. Our final analysis suggests that this summer will not be as hot as the previous three, but will still be characterized by widespread areas of above-normal temperatures, especially across the southern and western U.S.”

In June, WSI sees the monthly breakdown as:
Northeast* – Warmer than normal
Southeast* – Cooler than normal
North Central * – Warmer than normal
South Central* – Warmer than normal
Northwest* – Warmer than normal
Southwest* – Warmer than normal

According to Chris Kostas, Senior Power and Gas Analyst at ESAI Power LLC: “Cooler-than-normal June temperatures in the Mid-Atlantic region should allow the Consuming East an opportunity to catch up on natural gas inventories. Natural gas in underground storage began the injection season at a considerable deficit to last year’s level (i.e. 805 Bcf) and was recently 694 Bcf below last year’s level according to the EIA’s May 16 inventory report. Milder temperatures in the Consuming East this summer should help gas inventories decrease the year-over-year inventory deficit without pushing natural gas prices significantly higher. Warmer-than-normal temperatures in the West and cooler-than-normal temperatures in the East should act to strengthen Western gas basis prices relative to Eastern gas basis prices. While overall higher natural gas basis prices and warmer-than-normal June temperatures are expected to support power prices throughout much of the country, implied market heat-rates should run softer than last year in most regions due to higher year-over-year coal-fired generation. Coal-fired generators will find many more profitable hours due to higher gas prices and should be able to run at considerably higher capacity factors this June compared to June 2012.”

In July, WSI forecasts:
Northeast – Warmer than normal
Southeast – Cooler than normal, except Florida
North Central – Cooler than normal
South Central – Warmer than normal
Northwest – Warmer than normal
Southwest – Warmer than normal

Kostas added: “Western temperatures are projected to run much warmer-than-normal in July which when combined with dry seasonal conditions could lead to firm California power prices and implied market heat-rates. Warm and dry conditions in California would also raise wildfire risk and increase the possibility of high-voltage transmission outages. New York, New England and eastern PJM are also expected to be warmer-than-normal in July. In New England, natural gas basis prices are expected to be relatively firm until the Deep Panuke off-shore platform begins production (i.e. mid-summer). Warmer-than-normal temperatures in New York City and PJM-East should help to support congestion pricing in those regions, though with the recent firmness in gas prices implied market heat-rates should run considerably lower than last year’s levels. Mid-West power prices may be soft by comparison. Softer electrical loads due to mild summer temperatures, combined with higher coal-fired generator capacity factors due to firm gas prices should help to keep power prices soft in MISO and western PJM in July.”

In August, WSI forecasts:
Northeast – Warmer than normal
Southeast – Cooler than normal
North Central – Warmer than normal
South Central – Cooler than normal, except west Texas
Northwest – Warmer than normal
Southwest – Warmer than normal

Kostas: “The West is expected to be warmer than normal in August. With seasonal hydro output diminishing, firm electrical loads due to increased cooling demand and the possibility of very dry conditions continuing through the end of summer, August power prices in California carry considerable upside risk. Temporary power shortages and emergency conditions are possible in California should the warmer-than-normal temperatures transpire as forecast. Wildfires (due to dry conditions) and the risk to the high-voltage transmission system increase the risk of emergency events in CAISO. Warmer-than-normal temperatures in the Northeast combined with firm gas prices due to increased year-over-year demand for storage injections should help to maintain firm power prices in New York, New England and PJM. By contrast, mild August temperatures in eastern ERCOT and southern MISO could help to subdue power prices in those regions,” Kostas added.

WSI provides customized weather information to global commodity traders via its industry-leading WSI Trader Web site. WSI will issue its next seasonal outlook on June 25.

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

About WSI Corporation
WSI (Weather Services International) and Weather Central are the world's leading providers of weather-driven business solutions for professionals in the energy, aviation, insurance and media markets, as well as multiple federal and state government agencies. Together they comprise the professional division of The Weather Company and are owned by a consortium made up of NBC Universal and the private equity firms, The Blackstone Group and Bain Capital.

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.

Media Contacts:

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

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