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Cooler-Than-Normal Months Ahead For Northeast, WSI Says

Spring and early summer won't bring as much cooling demand from the Northeast and its natgas-hungry population centers as might be hoped, according to forecasters at Weather Services International (WSI), who expect temperatures across the region to average cooler than normal through July.

"As the 2015 El Nino event continues to emerge and strengthen, we expect the prevailing pattern over the next few months to acquire more of an El Nino 'flavor,’ with above-normal temperatures north and west, and below-normal temperatures south and east," said WSI Chief Meteorologist Todd Crawford.

"The drought in the West will accentuate the summer heat there, as we expect the most anomalous summer warmth to occur in the Pacific Northwest. By later in the summer, as the El Nino event continues to strengthen, more significant below-normal temperatures will become more likely across the northcentral and northeastern U.S."

WSI expects cooler-than-normal temperatures to dominate most of the country in May, with warmer-than-normal weather forecast for only the Northwest and North Central areas and portions of Florida.

"Delivered gas prices in the Mid-Atlantic and Northeast regions should be very soft in May, given the moderate temperatures expected," said Chris Kostas, senior power and gas analyst at Energy Securities Analysis Inc. "Power prices in Texas and Florida should also be relatively soft, given the below-normal temperatures expected across the South. While much of the price softness may be attributed to soft electrical demand, significantly higher year-over-year natural gas production should help to pressure natural gas prices lower."

Last week, the Energy Information Administration reported a storage injection for the week ended April 10 of 63 Bcf, bringing inventories to 1,539 Bcf, which was 692 Bcf greater than last year (see Daily GPIApril 16). That relatively high inventory level will also reduce year-over-year injection rates and help to keep gas prices soft and stable, Kostas said. He also expects warmer-than-normal temperatures in the West and Northwest to boost power demand and increase power prices in those areas, and generator maintenance to continue to influence power prices and implied market heat rates. And the effect of coal-fired generator retirements related to the Environmental Protection Agency's Mercury and Air Toxic Standards (MATS) should begin to affect power prices and implied market heat rates in late May as electrical demand begins to increase, he said (see Daily GPI, Dec. 21, 2011).

WSI's temperature forecast map is largely unchanged for June, with the Southwest moving into the warmer-than-normal column, and Florida expected to average cooler than normal. "Aggregate natural gas demand will likely be higher than last year as the country's power supply becomes more dependent on gas-fired generation to fill the void created by the MATS-driven coal retirements," Kostas said. "Implied market heat rates should become quite strong in regions affected by the coal retirements as relatively soft natural gas prices combine with increasing cooling demand in late June. With warmer-than-normal temperatures also expected in Northern California and the Northwest, power prices and implied market heat rates are also likely to be strong in those regions considering the diminished hydroelectric potential that is expected."

In July, WSI expects the Southeast to be dominated by warmer-than-normal weather, while the Southwest slips back into the ranks of cooler-than-normal regions.

"In the Northeast and Mid-Atlantic regions, soft summer demand should help to minimize the effects of reduced coal-fired generation in July," Kostas said. "Very high implied market heat rates can be expected during the hottest periods, however, as soft regional gas prices combine with peak energy demand."

The long-awaited El Nino event -- warmer-than-average sea surface temperatures in the central Pacific Ocean near the equator -- arrived earlier this year, but unlike some of its predecessors, it is likely to remain weak and exert little influence on global weather and climate, according to the National Oceanic and Atmospheric Administration (NOAA) (see Daily GPI, March 6). The El Nino, which is expected to continue into the summer, adds to growing concerns about snowpack and water supplies for hydropower in the western United States, NOAA said.

But at least one forecaster believes it may be time for weather observers in the energy industry and elsewhere to reconsider some long-held assumptions about temperature forecasting, including the impact of El Nino events (see Daily GPIMarch 25). The El Nino events of the 1990s were different than those of the past several years, according to Michael Schlacter, chief meteorologist at Weather 2000. Past El Nino's were misforecast, and the most recent El Nino has been slow to have an impact on North American weather patterns, he said.

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