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Transition to La Niña could mean hot summer, busier tropics, colder winter

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August


Transition to La Niña could mean hot summer, busier tropics, colder winter

The degradationof one of the strongest El Niño events on record could make room for La Niña conditionsto take grip of the U.S. by the fall, which could have bullish implications fornatural gas and power markets as early as this summer.

"Tosummarize the summer itself, the trend toward La Niña along with the Atlantic Oceanare the two things that really do point to a hot look," Bob Haas, manager forenergy weather at MDA Weather Services, said April 29 at the North American EnergyMarkets Association's spring conference in Orlando.

"Thereis an elevated level of confidence that we should see a hot summer this year versuswhat sometimes we might be getting in a seasonal forecast," he said.

Haassaid that June should be hot across most of the eastern half of the U.S. but "Julyand August is when the heat really blossoms even further." He said that Junewould be hotter than the 30-year norm but likely close to the 10-year norm, makingit the tenth hottest since 1950. July and August, however, are expected to be hotterthan both the 30-year and 10-year norms, making them the seventh and eight hottestin the past 65 years, respectively.

"Itlooks like this trend of gaining heat as the summer wears on is one that we wouldexpect with a transition towards La Niña," he said.

"WhenI add the summer as a composite, it's actually a top-five [hottest] summer"since 1950, he said.

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MDA forecastspopulation-weighted cooling degree days, or PWCDDs, at 255 in June, 370 in Julyand 345 in August. Combined, the projected 970 PWCDDs for the three summer monthswould surpass last year's 948, the 10-year average of 945 and the 30-year averageof 881. However, when accounting for low demand in the shoulder months of May andSeptember, PWCDDs are projected to total 1,294 in the 2016 cooling season, whichruns from May through September, better than the 10-year and 30-year averages butstill behind last year's 1,315, which was supported by a very hot September 2015.

It isnot uncommon for La Niña conditions to follow a strong El Niño. A moderate La Niñafollowed a strong El Niño in 1998 and a strong La Niña followed a strong El Niñoin 1973. MDA forecasts a 70% chance that La Niña conditions will be present by theend of summer, a 30% chance of neutral conditions and a very small chance that ElNiño conditions will remain.

"Thetransition from El Niño to a La Niña tends to be a pretty bullish, hot look to thesummer," Haas said. "Even if we only get to neutral, it's still more ofa warmer look to summer. So with the elimination of El Niño, I think the odds ofgetting to a cool summer this year are quite low."

MDA'scall for a hot summer is in line with other forecasters. In a May 4 outlook, AccuWeather.comsaid the entire U.S.,with the exception of the southern Plains, should experience a very hot summer thisyear. At the end of April, the Weather Company projected that, excluding parts of the Southwest, Texas andwestern Gulf states, warmer-than-usual temperatures are likely in most regions ofthe country from May through July.

Pattern points to more tropicalactivity in the Gulf

Lookingat tropical storm activity for the upcoming season, which spans from June 1 throughthe end of November, Haas said that MDA is "a little bit more bullish thanwhat we've seen in recent years."

IncludingHurricane Alex, which was a very rare hurricane in January, MDA is calling for 14named storms, seven hurricanes and three major hurricanes in the 2016 Atlantic Basinhurricane season, an increase from the 11 named storms, four hurricanes and twomajor hurricanes counted in the 2015 season and more in line with the averages overthe past 10 years.

However,of particular interest to the energy industry, MDA is calling for an increased hurricanethreat to the Gulf of Mexico, where a lot of production and gathering infrastructureis located, due to a positive Atlantic Multidecadal Oscillation, the associatedstronger-than-usual Bermuda high and less wind shear.

A hurricanehas not hit a U.S. Gulf state since 2012 and a major hurricane has not hit a Gulfstate since 2005.

"Juststatistically, we're sort of overdue, but what's more important than the statisticalcomponent of it, is the actual pattern itself that we're predicting should be abit more supportive of actually getting activity a little closer in here to theGulf," Haas said.

Haassaid the East Coast also faces an increased hurricane threat relative to recentyears due to more favorable conditions for development and a more persistent Easternridge.

MDA'soutlook also compliments previous outlooks from other vendors. On April 14, forecastersfrom Colorado State University said they anticipate12 named storms, five hurricanes and two major hurricanes at Category 3 strengthor higher. Accuweather.com is callingfor the formation of 14 tropical storms and eight hurricanes, accordingto an April 6 outlook.

Fall and winter

Lookingahead to fall, MDA is projecting 921 gas-weighted heating degree days, or GWHDDs,which is between the 10-year normal of 878 and the 30-year normal of 924 but wellbelow last year's record low of 735. PWCDDs should total 252, also between the 30-yearnormal of 246 and 10-year average of 266 and well below last year's record high335.

For winterof 2016-17, MDA is calling for 2,683 GWHDDs, which would make it a cold winter bymost standards with projected GWHDDs topping the 10-year average of 2,582, the 30-yearaverage of 2,605 and the very low 2,271 recorded in the previous winter.