EES Presentation (August 18, 2000). Opportunity for a complimentary relationship Market imbalance Example of EES opportunity Innovative weather risk products Long dated weather positions. Discussion Topics. Complementary Relationship.
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Consumers of Btu’s (municipalities, shopping malls etc.) are short hot weather in the summer and cold weather in the winter without concentrated exposures.
The demand for winter puts exceeds the supply because it has been easier for market makers to transact with Btu distributors.Weather Market Imbalance
In effect, TXU was buying an event day weather call from customers, but was paying far too much for this option.Example : TXU Tariff Opportunity
Using the PJM pool as a trial region, we established that weekly loads had a 98% correlation with weather.
We have begun trading PJM demand swaps with the power desk via Enron Online and will roll this out to the external market as soon as Enron Online technology allows.Weather Risk Innovative Products
Using temperature, we estimated the projected load* and compared it with the actual load.
* Estimate includes real GDP growth