Weather Trading 
Energy and weather are so inextricably tied to one another that it is sometimes hard to separate the two. The demand for power is directly related to temperature going up in summer and going down in winter. If, therefore, you have an unusually cool summer, the demand for power will be much lesser than anticipated, and the same in case of an unusually warm winter. Several electricity utilities enter into power purchase agreements based on anticipated demand, and would face serious financial losses in such cases. 
Weather derivatives provide such companies an option to hedge against risk of weather fluctuations. It is no surprise, then, that one of the conferences more lively discussions centered on the presentation by Tom Fletcher, head of weather trading for Mirant <http://www.mirant.com/>. 
In describing weather trading, Fletcher reported the market has grown exponentially since it was first formed in 1997. Fletcher highlighted how successful trading requires purchasing the right product. He went on to describe some of the sophisticated products being launched and how Mirant is integrating weather risk into their overall profile and what that means for the traders on the floor. 
With presentations from other market leaders such as Centrica, I-Wex, Spectron, Aquila, LIFFE, Mirant, Bewag, Aon and Entergy-Koch, Weather Trading Europe <http://www.eyeforenergy.com/weather/> provided three days of the latest developments in European trading. 
The conference touched on key issues surrounding the sector including liquidity in the weather market-where is it and how to access it; data issues-the state of play in European weather data and how you can best utilize the information you've got and a host of other topics designed to help attendees leverage their skills. 
As weather trading takes its place in the online world, there is a pressing need to develop greater use of weather derivatives from corporations to avoid the market becoming a predominantly speculative industry. 


Michelle Lokay
Account Director
Transwestern Commercial Group
713-345-7932