The Dahlenburg transaction will protect revenue equal to 20 percent of the utility's annual profit, Esser said.
Weather affects profits for retailers, airlines and leisure businesses as well as utilities.
Sears, Roebuck & Co, the largest department-store company, said July 18 that its second-quarter earnings fell 13 percent as sales of items such as air conditioners were hurt by cooler weather and a slowdown in consumer spending.
Carl Womack, the CFO of Pacific Sunwear of California Inc, said sales of the company's surf-orientated, outdoor teen-clothing can be affected by adverse weather, for example, "when we're going into a new season or out of a season." For now, PacSun has ``no interest'' in derivatives, he said.
Companies offering weather risk management are a mixture of energy companies, such as Aquila, Enron Corp, Hess Energy Trading Co and Axia Energy LP, a joint venture between Koch Industries Inc and Entergy Corp.
Insurance companies such as ACE Tempest Reinsurance and Commercial Risk, a unit of Scor SA, are also offering weather-risk products. New participants include Dresdner Bank AG, the banking unit of Allianz AG, and Deutsche Bank.
Companies such as Aquila, while agreeing to abide by readings in backyard weather stations, sometimes take steps to assure that the measurements are accurate.
Aquila installed US$5,000 worth of electronics to enable its traders in Kansas City to monitor readings at the Pollock Pines Pacific House station, an official National Weather Service site, or take their own readings at any time of the day or night. The kit included electronic temperature and precipitation gauges, a video camera, motion sensor device and an infrared lamp.
``When you're running a huge contract such as this, the risks are high,'' said Aquila's Nathan.
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