The U.S. offices of Australia-based Macquarie Bank have formed a joint marketing alliance to provide risk management services to Sierra Southwest Cooperative Services Inc.'s natural gas customers in Arizona, California and Nevada.
Sierra, a Touchstone Energy Cooperative, currently serves a load of about 10 million Dth/year, and the contract involves about 100 large industrial, commercial and government customers, a Sierra spokesman said.
The alliance will allow Macquarie Bank, through marketing conducted by its New York and Texas offices, to offer hedges and tailored financial derivatives to Sierra's retail customers and business associates, providing price certainty and risk management in the increasingly volatile natural gas market.
"It does two things," said Dennis Criswell, vice president of marketing for Sierra. "Obviously the volatility of natural gas creates a need particularly among end users, and we have not been able to offer those kinds of risk management tools in the past so it makes our offering more attractive to end user customers. Macquarie also has been a gas marketer more on the producer side so this gives them ability to get into the gas market on the end user side."
He said Sierra began retail marketing operations in 2001 with 10,000 Dth/year of demand and today serves 10 million Dth/year. The company has no physical distribution assets but operates strictly as a retail commodity provider. "There's a big market out there and room for a lot more growth," said Criswell.
"The agreement provides our U.S. energy markets business access to a broad network of customers who will benefit from preferred access to Macquarie Bank's derivative and risk management expertise in the management of their exposure to natural gas," said Simon Grenfell, Global Head of Macquarie Bank's energy markets division.
Sierra CEO Donald W. Kimball said the "financial strength and worldwide experience of Macquarie Bank, combined with Sierra's unique customer relationships and service capabilities creates a formidable entity in a market searching for a retail supplier that can be trusted."
Touchstone Energy is an alliance of more than 620 electric cooperatives in 44 states that collectively deliver power and energy solutions to more than 17 million customers.
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