WSI Energycast Outlook Calls for Warm Period in East, Cool in Northwest

The monthly breakdown follows:

In November:

• Northeast – Warmer than normal
• Southeast – Warmer than normal
• N Central – Warmer than normal, especially IA/NE/WI
• S Central – Warmer than normal
• Northwest – Cooler than normal, except WA/OR
• Southwest – Cooler than normal, especially CA

Expected Market Impact (provided by ESAI)
WSI’s November forecast suggests warmer-than-normal temperatures in all regions except for the Southwest and Northwest. The warmer outlook is favorable for lateseason injections to storage. Due to the recent above-average injections to storage (despite high Gulf production shut-ins of over 5.0 Bcf), ESAI expects storage levels to reach 3.1 Tcf by the end of October. Warmer weather in the northern tier of the country should allow injections to continue into November and storage could reach 3.2 Tcf before the start of the withdrawal season. This should be moderately bearish for natural gas markets as supply concerns should ease somewhat.

In December:

• Northeast – Warmer than normal
• Southeast – Warmer than normal
• N Central – Warmer than normal, especially NE/IA
• S Central – Warmer than normal, especially OK/KS
• Northwest – Cooler than normal, especially WA
• Southwest – Warmer than normal

Expected Market Impact (provided by ESAI)
The WSI December forecast indicates a continuance of the warmer-than-normal temperatures throughout the U.S., especially in the key Northeast and North Central heating regions. With a significant amount of Gulf production likely to be still shut-in during December, warmer weather will ease early winter concerns. If December is warm, storage will not see a heavy early season draw and will help to keep markets from being too volatile to the upside. Prices may not move lower, but the early season low-demand outlook will ease supply concerns. Demand for electricity will also be lower under the warmer outlook and the resulting lower loads will moderate prices in the northern-tier power markets.

In January:

• Northeast – Cooler than normal
• Southeast – Cooler than normal
• N Central – Cooler than normal, except NE/IA
• S Central – Warmer than normal, especially OK/KS
• Northwest – Cooler than normal
• Southwest – Warmer than normal

Expected Market Impact (provided by ESAI)
WSI’s January forecast indicates slightly cooler-than-normal temperatures in all areas except the South Central and Southwest regions. However, much of the north-central region will be warmer than normal. The big concern in the Northeast markets is for extreme cold in January due to the potential for gas delivery curtailments due to gas pipeline limitations under very high demand conditions. Severe cold weather tends to take a toll on generator operations in the form of higher levels of forced outages. The cold January outlook in the Northeast suggests that there is some potential for regional spikes in gas and electricity prices.

According to WSI seasonal forecaster Dr. Todd Crawford, “The lack of any El Nino event, the
sharp decrease in the PDO, and the relatively slow Arctic snow cover build-up all argue for a
mild heating season in the East this year, although our seasonal models do suggest a good
possibility for some cold weather in January.”

WSI successfully predicted (1) the hot summer nationwide in 2005, (2) the sharp transition to
warm weather over the eastern US in June 2005, and (3) the cold and snowy winter of 2004-
05 in the Northeast. Their three-month seasonal forecasts have been skillful for 8 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. The next forecast update for November-January will be issued on
October 27, with the next new forecast package (for December-February) issued to clients on
November 15 and to the press on November 22.

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 Andover, 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.