Sempra Energy Trading plans to start offering weather derivatives to its customer base in the next several weeks and will also start trading the instruments on a proprietary basis. Sempra is looking to enter the market now because liquidity has improved, and because customers have grown increasingly interested in the products, according to Jackie Mitchell, managing director, overseeing West Coast natural gas operations in Stamford, Conn.
To spearhead the effort, Sempra has hired Paul Henry, head of weather derivatives trading at Dynegy Marketing and Trade in Houston, in the new position of v.p., head of weather derivatives trading, said Mitchell. Henry is said to have overseen a highly profitable weather trading operation at Dynegy, which reportedly netted more than USD10 million last year, according to market professionals. Several weather traders suggested Henry quit Dynegy because he did not believe he was adequately compensated. One market official described the move as a coup for Sempra. "Obviously he's going to rock 'n' roll over there," he said. Henry declined comment via a Sempra spokesman. A spokesman for Dynegy declined comment.
Sempra Energy Trading does not plan to hire any additional weather derivatives personnel in the near term, said Mitchell, noting that weather products will be marketed by the existing sales force, which handles crude oil, gas and power.
Sempra Energy Trading is the wholesale energy trading arm of San Diego-based Sempra Energy.
