Weather tech. firm launches utility service unit

Daily Record, The (Baltimore), Apr 23, 2002 by Bob Keaveney

AWS Convergence Technologies, the Gaithersburg-based owner of the world's largest network of weather stations, yesterday launched a new division focused on selling its meteorological information to energy companies. Its first two customers already are on board.

The new division, AWS Energy Services, will be built from scratch, employing perhaps eight people by year's end, according to its new director, Jim Anderson.

AWS, which owns 5,000 Web-enabled automated weather stations nationwide -- many of them in schools, which use them for educational purposes while the company uses the data for business -- did not provide financial projections for its new energy division. But Anderson said it would target the 60 or so companies that sell electricity to retail utilities, as well as the utilities, both of which need weather information to help determine how much electricity to buy and sell, and when.

"The energy business, and especially the energy trading business, revolves around who has the best information," he said.

That's because the wholesale price of a megawatt hour of electricity fluctuates from hour to hour -- often violently -- largely because of weather changes that influence demand. To the extent that companies can accurately guess weather patterns -- and thus price trends -- they have an edge on their competitors, Anderson said.

For example, a line of thunderstorms that rumbled through the mid- Atlantic states April 4 arrived and dissipated so quickly that forecasters were caught off-guard. They predicted the storms would arrive later, and failed to forecast the average 20-degree drop in temperature that the storms left in their wake.

That day, as residential and business customers got chilly and began cranking up the heat, the wholesale price for a megawatt hour of electricity spiked, from $25 to $60. The entire episode took about an hour, Anderson said.

"AWS brought us the only network of weather stations that can instantly stream weather data to our traders' desktops," said Stuart Rubenstein, chief operating officer of Constellation Power Source, the Baltimore-based wholesale trading arm of Constellation Energy Group.

Constellation is one of AWS Energy Services' first two customers; the other is Columbus, Ohio-based AEP Energy Services. Both companies said they agreed to beta test AWS' software, called MesoStreamer, because the data it provides is instantaneous, allowing their energy traders to act on information quickly, rather than relying on National Weather Service data that is often an hour old or older by the time it reaches them.

The 75-employee AWS is perhaps best known for its free WeatherBug Service, which streams live weather updates to the desktop computers and wireless devices of some 7 million users. The privately held company received $15 million in venture capital financing two years ago, but does not disclose revenue information.

AWS CEO Bob Marshall said in a statement that its weather data is more "granular" because of the number and location of its stations -- in schools, in the midst of populated communities, rather than at airports where many of the National Weather Service's 1,000 stations are based.

AWS will begin offering its MesoStream software more broadly in June, followed by a series of complementary services, such as sophisticated weather forecasting models, historic weather data and custom installation of automated weather stations. Anderson said he hopes those stations will be popular with gas companies who want detailed weather information in areas near their underground gas pipelines, because surface temperatures can affect the flow of gas.