By Max Webb, Managing Director of Pricing
Memorial Day has already come and gone and we’re marching toward the arrival of summer in a few short days. It’s hard to believe that just a few weeks ago, Maine saw all-time low temperature records broken, and even some May snowstorms. New England has been experiencing springs reminiscent of the past, including low pressure systems that invite temperature and weather instability a.k.a., rain and gloom, with some warm temperatures popping up now and then.
Along with warm temperatures, summer also means hurricane season. The National Oceanic and Atmospheric Administration (NOAA) has already had its eye on some disturbances in the Atlantic. Is this early season activity an indicator of a busy summer? Surprisingly, the Pacific Ocean water temperatures play a large part in determining the intensity of the hurricane season.
Back in November, Zack Hallock, CES Senior Energy Services Advisor and I partnered on a blog titled “Winter Weather Patterns, Europe’s Limited Gas Supply, Market Volatility, and the Impact on Energy Prices: What to Expect This Cold-Weather Season.” In that article, we illustrated how the Pacific Ocean influences atmospheric currents, known as “El Niño” and “La Niña,” and how this cyclical phenomenon plays an important role, especially during the fall and winter months.
As we transition from La Niña to El Niño this year and before we look too far ahead, let’s first answer a burning question that many of us are asking right now: What does the rest of the summer have in store for us?
Forecasting Hurricane Season
June 1 to November 30 is considered hurricane season. We’re over a week into the season and we’ve already seen some activity in the Atlantic. The National Hurricane Center has named its first storm of the season in early June, Tropical Storm Arlene, which fizzled out after just a couple of days with minimal impact.
What are the experts saying about the rest of the season? Dating back to their first forecast in 1984, the researchers at Colorado State University (CSU) are some of the leading experts at forecasting hurricane season. With nearly 40 years’ experience, just about every major news outlet references their forecasts. Last year, CSU called for an above-normal season in 2022, which turned out to be a near-average season. This year, CSU’s forecast released on June 1 (https://tropical.colostate.edu/forecasting.html) calls for a near-average hurricane season. It’s worth noting their first forecast released in mid-April called for a below-average hurricane season. As a comparison point, NOAA is also calling for a near-normal season (Figure 1). With a near-normal forecast, there’s a lot of rain and wind on the horizon with 15 named storms, 7 hurricanes, and 3 major hurricanes projected by CSU for this season. And, as we’ve all seen before, it only takes one storm to cause disruption and destruction.
Figure 1: 2023 NOAA Atlantic Hurricane Season Outlook
La Niña Gives Way to El Niño
Currently, Atlantic Ocean Sea surface temperatures are well above average, which should help fuel and strengthen storms. So why the calls for a below average season? It’s in large part due to the Pacific Ocean Sea surface temperatures. For the past few years, the Pacific Ocean has been below average, which has a major impact on global atmospheric and weather conditions. This atmospheric setup is referred to as a La Niña. After three straight years of La Niña conditions, the tides are finally changing with the Pacific Ocean starting to trend above average. This signifies the transition from a La Niña to an El Niño (Figure 2). With that seemingly simple shift brings a big impact to the hurricane season and beyond.
During an El Niño, westerly winds blow from the west to the east from the pacific, over central America, and into the Caribbean and Atlantic Ocean. Typically, Atlantic hurricanes approach the U.S. in an easterly fashion, which means the westerly El Niño winds and easterly hurricanes combat one another. As a result, an El Niño summer should have a dampening effect on the Atlantic hurricane season. However, as previously mentioned, the Atlantic Ocean temperatures are above average. So, if the westerly winds don’t materialize as strongly as expected, then we may see a more active hurricane season.
Figure 2: El Niño and La Niña : What’s the Difference?
Summer Forecast
As we transition into an El Niño, what impact does that have on our summer vacation plans? To get an idea, we’ll first turn to NOAA with some shorter- and longer-term forecasts. Starting with June, NOAA is predicting an average to above-average start to the summer – in terms of temperature – for New Englanders (Figure 3). We’re also looking at a normal June with respect to precipitation. On average, New England sees 3.5 inches of rain during the month of June. (Figure 4)
Figure 3: NOAA June 2023 Temperature Outlook
Figure 4: NOAA June 2023 Precipitation Outlook
Looking at the longer-term picture, NOAA is also calling for an above average June-July-August, with higher temps for New England and for most of the country. The Midwest is the exception to that forecast, with equal chances of an above average or below average summer (Figure 5). Simultaneously, the eastern half of the U.S. is forecasted to bring above average precipitation.
Along those lines, for New England, it’s the flip of the proverbial coin. The region could experience either above- or below- average rain fall. It wouldn’t surprise me if New England were to lean into the above-average category by summer’s end. Be sure to double check the Weather Channel before scheduling your next barbeque or baseball game (Figure 6)!
Figure 5: NOAA Summer 2023 Temperature Outlook
Figure 6: NOAA Summer 2023 Precipitation Outlook
For comparison’s sake, let’s look at another forecast model called the Canadian Seasonal to Inter-annual Prediction System (CanSIPS) (Figures 7 & 8). Below are images of June and June-July-August forecasts. The similarities are clear with the overall theme being above-average temperatures for much of the country. As you can see, however, the models featured in Figure 5 v. Figures 7 & 8 don’t agree on where that below-average anomaly will occur. NOAA is expecting the anomaly to occur over the Midwest, while the CanSIPS model has the anomaly shifted over the southern half of the country.
Figure 7: CanSIPS June 2023 Temperature Forecast
Figure 8: CanSIPS Summer 2023 Temperature Forecast
If I were a betting man (and I’m not because it’s not legal in Maine!), I would put my money on July being the warmest month of the year. As we all know, weather is famously – or infamously – unpredictable, and as seen by the variations in the above forecasts, not something worth betting/losing money on!
CES Self-Help/Demand Response
If the summer forecasts turn out to be correct, it’s going to be a hot one. For New England-based customers enrolled in a demand response program, now’s the time to brush off your energy curtailment playbook. While forecasts don’t show any heat waves in the next couple of weeks, demand response vendors will soon be sending out audit event notifications.
CES also offers a voluntary Self-Help Demand Response Program, which helps end users more accurately curtail on the most likely peak days of the summer. CES monitors weather forecasts and load conditions in New England. When we see a forecasted stretch of hot, humid weather in the five-day forecast and we think loads are likely to be high, we send out an email alert to all of our customers in our Self-Help Program. This is an informational alert - it is not an Action Alert. During the morning of a day that we believe could be a peak load day, usually between 9:00 and 10:00 AM, we will send out an email alerting customers that we could see a peak load that day and telling customers to stay tuned for more specific Action Alerts later in the day. If loads build during the morning and look like they may be peaking later in the afternoon, we will send out Action Alerts recommending that those customers that are able should reduce loads during specific time windows, usually 2-4 hours. If loads do not appear to be peaking, we will send out a notice by early afternoon advising customers that we do not think the peak will occur that day.
The CES Self-Help program is always voluntary and without fees. There is never any obligation to respond to our notifications and, if you are able to respond during the hour of the ISO-NE system peak, 100% of the savings are yours to keep. To participate in the CES Self-Help Program, email ncallanan@competitive-energy.com.
An Early Glimpse at Fall and Winter: Energy Impacts & Considerations
Electricity generation and consumption is at its peak in the summer in New England due to the increased use of air conditioning to stay cool. In terms of price, the summer is relatively cheap when compared to winter price spikes. It’s the futures market that could see the largest movement depending on how certain factors evolve through this summer.
Last year, the energy markets rose through the summer and into the fall, which was triggered by speculation for cold weather forecasts, combined with the fear of low fuel supply for generators during the coldest winter days. Luckily, the cold was mostly held at bay, so winter spot prices were relatively held in check. This year, the same risk factors are still in play, so it won’t take much to trigger a similar rise in electricity and natural gas prices. Currently, forecasts are calling for a strong El Niño to develop this summer and last into the winter. If the forecasts shown above are correct and it’s a hot summer, there will be more natural gas burn for electricity generation to help keep us cool throughout the summer. This would put us in a tighter spot in terms of natural gas storage inventory heading into fall and winter. Strong El Niño’s normally result in slightly above average temperatures for the Northeast U.S., which might save us from long term forecasts calling for a below average winter. However, the Northeast has had a few mild winters in a row and the law of averages makes me think we are due for some cold.
As we move through the summer into the fall, keep an eye on winter forecasts. If there’s any sign of a cold winter, combined with the lack of Liquified Natural Gas back-up options in New England, a similar story to what played out in the summer and fall of 2022 could occur.
Whether you’ve already locked in your energy rates through 2023, or if you’d like to wait until you’re back from summer vacation before making a call, CES is here to help you navigate these uncertain waters. In any case, feel free to reach out to one of our CES Energy Services Advisors to discuss your energy position.
Photo by Dave Hoefler