2025 Summer Outlook Report

Winter 2024/2025 Recap

POWWR’s Winter 2024/2025 Outlook, which was released in October 2024, is shown in Figure 1.  As you can see, we called for generally cool conditions east of the Mississippi River.  Actually, we were one of only a few outlets (that we know of) to do so!  Many times, we were told by clients that “so-and-so is calling for a very warm winter in the East or nationwide.”  However, we stuck with our initial outlook.  While final NOV-MAR results are shown in Figure 2 and generally show warm anomalies, the warm conditions are due mainly due to a warm March and do not reflect the six intrusions of Arctic air into the United States that occurred east of the Rocky Mountains from December through February.  January and February (Figure 3) actualized far colder that what the NOV-MAR results show. Most clients hedged for a colder winter and reaped the benefits, especially those that purchased JAN/FEB call options.

Figure 1

Figure 2

Figure 3

Summer 2025

The Southern Oscillation

The Southern Oscillation is a climate signal that reflects sea surface temperatures and the resulting air pressure pattern in the equatorial Pacific Ocean between Asia and South America.   For this summer, climate models are leaning to a neutral to slight La Nina conditions (Figure 4).  For analog purposes, I chose years that best represent winter conditions (slight La Nina) on the way out and expected summer conditions to come (neutral/slight La Nina).  That is a fairly small subset of years in the last 30-year sample size.  While there were years that fit the criteria before say, 1995, years prior to the 1990s are generally skewed to the cooler side in relation to the last 30-Year Climate Normal which are based on 1991-2020 and more greatly impacted by the warming of recent climate change.  In summary, our “macro” influence for this summer looks to be a mild La Nina to neutral conditions.

Figure 4

Soil Moisture

Soil moisture is a “micro” influencer of seasonal weather.  By this I mean that it is a short-term variable and can be easily changed and can alternate between extremes multiple times during a season. Therefore, I do not base any outlook solely on the initial soil moisture conditions.  More often than not, I use it as an indication of how the first month of a season may begin.  For summer months, dry conditions will promote warmer air temperatures than if soil moisture was adequate.  That is because some of the air’s energy (heat) is used to evaporate the moisture during adequate moisture conditions and does not go towards warming the air.  Currently, soil moisture conditions are seen in Figure 5.  This shows a majority of the continental United States being in some form of dry conditions, with the most extreme in the Southwest from CA through west and south TX.  Other areas of significant drought lies in the northern Plains.  The final area of more moderate drought conditions exists in a fairly narrow swath along the East Coast from Maine through Florida.  Again, without the necessary rains to eat away at the drought conditions, May could begin with a warmer than otherwise slant in those locations with insufficient soil moisture.

Figure 5

The POWWR Summer 2025 Outlook

Given the overarching climate condition involving a weak extent of the La Nina mode of the Southern Oscillation, we have used the analog years of 2001, 2013, and 2017 as an indicator of the average temperature anomaly for the May-September term of 2025.  Our prediction (Figure 6) calls for warm anomalies west of the Rocky Mountains with extreme warmth in the Intermountain West areas of the western extent of both WA and OR, ID, MT, and the northern reaches of both NV and UT.  Areas east of the Rockies we predict to be “normal” save for the Southeast and into the lower Ohio Valley, which we predict to have cool anomalies from May through September, on average.

Figure 6

Tropical Outlook

A “normal” Atlantic Hurricane season sees 14 named storms, of which 7 reach hurricane status, of which 3 reach “major” (cat 3 or greater) status.  Because the analog years that we chose as most representative of Summer 2025 involve neutral to a weak La Nina Southern Oscillation conditions, our prediction of 15/7/3 is very close to “normal”.  As for landfall location, we believe the highest chance is in Florida and the far southern East Coast, followed by lesser chances for both the central Gulf Coast and for Texas.  We do not believe the mid and upper East Coast to be in play with a high probability.  Of the 15 named storms, our analogs show a moderate proportion of US-landfalling storms, on the order of three or four. 

Ian Palao VP, Strategic Energy Services

Mr. Palao specializes in commodity risk management and the science of meteorology/climatology. He serves as one of POWWR’s many subject matter experts. He has 20 years of experience in the energy/utility industry, where he used his skills and knowledge of meteorology and advanced statistics.

From 2000 through 2011, he worked at TXU Energy Trading/Luminant Energy in Dallas where he served in three capacities. Most recently, he served as Capital/Liquidity Manager of the trading portfolio, optimizing the use of capital while still maintaining profitability. Prior to that, he managed the Weather Derivatives trading desk, devising strategies and executing trades for both speculative and hedging purposes. Upon joining TXU, he served as manager of the Quantitative Risk Group, assisting the company in the identification, quantification, and remediation of financial risks inherent in the company’s multi-commodity trading portfolio.

In his first foray into energy/utilities, he was a Marketing Executive with Louisiana Gas Service Company, a local distribution company, where he primarily marketed natural gas technology to commercial and industrial customers. Before that, he served as a Research Scientist under contract to the National Oceanic and Atmospheric Administration (NOAA).

Mr. Palao has an M.B.A. from Tulane University. He also has both an MS and BS in Meteorology from Florida State University. He is a member of the Financial Weather and Climate Risk Management Committee of the American Meteorological Society (AMS).