WSI Energycast Seasonal Outlook Calls for Cool in Northeast, Hot in Plains/Rockies

WSI expects the following monthly trends:

• In July, cooler-than-normal temperatures are expected in the Northeast, mid-Atlantic, Ohio Valley, and Southeast, along with the Pacific Northwest and California. Coolest temperatures, relative to normal, are expected in the Northeast. Warmer-than-normal temperatures are expected in Rockies, Plains, Great Lakes, and Gulf Coast, with the largest temperature anomalies expected in the Plains.

• In August, cooler-than-normal temperatures are expected to be confined to the states along the East and Gulf Coasts, along with California. Coolest temperatures, relative to normal, are expected in the Southeast and mid-Atlantic states. Warmer-than-normal temperatures are expected elsewhere, with the largest temperature anomalies expected in the central and southern Plains and northern Rockies.

• In September, cooler-than-normal temperatures are expected to be confined to the states along the East and Gulf Coasts, along with California. Coolest temperatures, relative to normal, are expected in the Southeast and mid-Atlantic states. Warmer-than-normal temperatures are expected elsewhere, with the largest temperature anomalies expected in the northern Rockies and Plains.

According to WSI seasonal forecaster Dr. Todd Crawford, “We expect below-normal temperatures in the Pacific Northwest in July, while CPC is forecasting above-normal temperatures in that region. We also expect the July-September period to be warmer-than-normal in the Plains, while CPC is forecasting equal chances of warmer-than-normal or colder-than-normal in that region.”

Effects in the Marketplace
WSI’s current forecast indicates cooler-than-normal temperatures on the East Coast and California in July and August. Moderate cooling loads in the key Eastern and California markets will help to minimize power price excursions. Lower demand for natural gas will also help to keep natural gas inventories building at a higher pace through the summer which will ease gas prices and in turn moderate power prices. With cooler-than-normal temperatures, the potential for extended heat events is lower which lowers the potential for unplanned outages at mid-merit and peaking generating units. When run at high capacity factors during extended hot weather, these units are susceptible to outages. The cooler than normal weather forecast for these regions makes possible a combination of lower loads, lower gas prices and greater generating unit availability that will moderate power prices in these regions. Warmer-than-normal temperatures are expected in the Mid-continent and Gulf Coast, however, lower gas demand from other regions will offset price increases due to increased loads in these regions.

WSI successfully predicted (1) a hot 2002 summer season, (2) a cold ‘02-‘03 winter in the Southeast and (3) a warm ’02-’03 winter in the Pacific Northwest. Their three-month seasonal forecasts have been skillful for 7 out of the last 12 periods. A skillful seasonal forecast is defined as one that is closer to what is actually observed than a forecast using the 30-year average temperature.

WSI, which provides customized weather information to energy traders, issues its Seasonal Outlook twice monthly.

About WSI
WSI Corporation 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 headquartered in Billerica, Massachusetts with offices in Birmingham, England, and is a wholly owned subsidiary of Landmark Communications. More information about WSI can be found at www.wsienergycast.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.