Weather Hedging

Do you worry about how weather will impact your bottom line?  Some people lose sleep about not having cold temperatures in the winter.  For others, it’s a problem if the sun does not shine or the wind does not blow.  Too much snow racking up plowing expenses?  Perhaps a very hot summer is a concern.

POWERHOUSE can take the weather worry out of your business. From understanding the instruments to the design and execution of the hedge, POWERHOUSE is a one stop-shop. 

Hedging weather breaks down into a few steps.

Swaps - Weather

1. Identify your risk. 

Would you like to know how weather impacts your bottom line? POWERHOUSE can analyze your business’ weather risk. Through the power of big data and cloud computing, you will learn how over 50 weather variables in thousands of locations impacts your profitability.   

What if you already know what your risk is. For example, you know that a warm winter will decrease your sales. If so, move on to step

2. Understand the instruments, develop a strategy.

POWERHOUSE can help educate you on the various weather hedging instruments and benchmarks. There are many different settlement styles for weather hedges. Maybe you need to hedge a whole season. Or a single month. Maybe you only need to hedge against extreme temperature days. The good news is weather hedging can be highly customized for YOUR business.

3. Understand the venues

Most weather hedges are executed in the over-the-counter market, giving the most flexibility in the design and size of the hedge. There may be a case where you need the counterparty risk reduced.  Weather futures and options are also traded on the Chicago Mercantile Exchange. The good news is POWERHOUSE works with market makers in all markets, giving you access to a broad array of hedging instruments.

4. Execute the strategy

POWERHOUSE will broker the execution of the hedge.

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