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FEA Power Sector Model Helps Energy Companies


BERKELEY, Calif., Aug. 18 /PRNewswire-FirstCall/ -- Financial Engineering Associates, Inc., a wholly owned subsidiary of Barra, Inc. (Nasdaq: BARZ), and a leading developer of derivative pricing and risk management technologies for the energy and commodities industries, unveiled the FEA Power Sector Model, a breakthrough approach to power price modelling. FEA incorporated the model into two new software modules: @ENERGY(R)/Power Generation(TM) and @ENERGY(R)/Load Serve(TM).

Companies with exposure to power prices need a better way to assess uncertainty and risk regarding their long-term energy contracts. Using FEA Power Sector Model, companies can instantiate best practices in energy risk management.

The first module leveraging the FEA Power Sector Model, @ENERGY/Power Generation, incorporates the latest advancements in derivatives pricing techniques by applying the Least-Squared-Monte-Carlo (LSM) approach to optimal plant valuation. @ENERGY/Power Generation is unique in its ability to perform true and full stochastic optimization of a power generation asset, while taking full account of the multifaceted dynamics of power and fuel prices.

@ENERGY/Load Serve incorporates the latest research in the area of hybrid modeling to deliver a powerful tool for load service contract valuation and trade-level risk assessment. @ENERGY/Load Serve explicitly accounts for counter-party exercise behavior, models high frequency exercise decisions, covers an exhaustive range of contract provisions, and employs the FEA Power Sector Model to deliver unrivaled accuracy in modeling the co-movement of spot power prices and retail load.

"FEA has delivered quantitative research within an open, flexible and robust software solution," said David Soronow, vice president of product management at FEA. "Volumetric risk assessment and generation asset risk management are two issues on the minds of every power industry risk manager -- and we set out to develop analytics that would provide the definitive answer with the FEA Power Sector Model."

@ENERGY/Power Generation and @ENERGY/Load Serve are delivered within a highly optimized software architecture that interfaces directly with Microsoft Excel for unparalleled reporting and analysis flexibility.

About @ENERGY/Power Generation

@ENERGY/Power Generation sets a new standard in real options valuation by delivering an unrivaled level of accuracy in assessing the value, risk, and optimal dispatch strategy of fossil fuel power generation assets.

About @ENERGY/Load Serve

@ENERGY/Load Serve is a precision-engineered software tool for mark-to-market valuation of load contingent power contracts including retail load service agreements and full requirement deals.

About FEA

Focusing on the energy, financial, and commodities markets since 1989, Financial Engineering Associates, Inc., a wholly owned subsidiary of Barra, Inc., is renowned for the development of option valuation models and market risk assessment software. Powered by constant innovation, aggressive release schedules, and superb technical support, FEA is routinely first-to-market with pricing models and authoritative risk management tools for the latest, most complex financial instruments. FEA is used at more than 700 sites by institutional clients that include: energy firms, money center banks, Fortune 500 companies, trading enterprises, and leading financial firms worldwide. FEA remains at the forefront of financial engineering through an on-going commitment to meeting the needs of its clients worldwide. For more information, please visit http://www.fea.com .

NOTE: @Energy is a registered trademark of Financial Engineering Associates, Inc. FEA, Power Generation and Load Serve are trademarks of Financial Engineering Associates, Inc.

SOURCE  Financial Engineering Associates, Inc.

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