Scorching Summer to Help U.S. Utilities Mitigate Pain From Virus

(Bloomberg) -- Americans are likely to get some extra heat this summer, aiding power suppliers that are reeling after the coronavirus crisis hurt demand.

Weather forecast models are signaling coming summer temperatures will be higher than in 2019, with a potential La Nina in the Pacific helping anchor hot high-pressure systems at either end of the U.S., according to Energy Weather Group LLC.

“The summer could be a scorcher,” Jim Rouiller, lead meteorologist at Energy Weather Group, said in an interview. “There will be a lot more cooling demand than last year, and I feel pretty good about that.”

Utilities have reported a decline in sales to businesses and manufacturers following stay-at-home orders, with an uptick in use from households partially offsetting it. Above-average temperatures during peak consumption season could further help companies ease the effects of the crisis.

In Texas, the U.S.’s second-largest economy, it could take only 2 degrees of higher summer temperatures to compensate for the demand hit from Covid-19, Curt Morgan, chief executive officer of Vistra Energy Corp., said last week in a conference call with analysts.

Texans are likely to use a record amount of electricity this summer due to extreme heat, the state’s grid operator said on Wednesday.

A hotter-than-usual summer could also help offset losses caused by mild winter temperatures, American Electric Power Co.’s chief financial officer, Brian Tierney, said last week in the company’s earnings call. Warmer conditions took a toll on the first-quarter earnings of several utilities including Dominion Energy Inc., FirstEnergy Corp. and DTE Energy Co.

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