FEA @ENERGY/Power Generation 2.0 Offers More Accurate Power Plant Optimization, Risk Exposure Assessment & Valuation Tool

HOUSTON, Texas - Energy Risk USA Conference - May 18, 2004 - 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, today announced @ENERGY®/Power Generation 2.0 for power plant optimization, risk exposure assessment and valuation. In the current energy market environment, imprecise calculation of power generation exposures can cause participants to have their credit rating downgraded and force them to take significant write-offs. To address these challenging market conditions, FEA has enhanced this module to include more accurate pricing models and added functionality that help independent power producers, power marketers, and energy hedge funds better understand the risks in their portfolios.

"In order to extract the optimal value implicit in a power generation asset, sophisticated asset managers implement a dynamic hedging program in which the hedges reflect both the physical operating constraints of the asset and realistic price processes," said Frank Cummings, president for FEA. "By providing realistic stochastic price process models and modeling physical operational constraints using a real options framework, @ENERGY/Power Generation now provides a more accurate valuation of power generation assets and tolling agreements available to all asset managers."

New features enhance energy risk analysis and management

Included in @ENERGY/Power Generation 2.0 are more accurate, flexible, and customizable risk analysis, pricing and valuation features such as:

Increased accuracy - Unlike most existing tools that use an approximate, simple spread option model that is highly sensitive to numerous calibration parameters, @ENERGY/Power Generation realistically models physical inputs and computes accurate and stable results;

Enhanced pricing modules - A separately licensed sub-module GenExp has been added to the @ENERGY/Power Generation product. This allows valuation using the 1-factor price process model, the new 2-factor mean-reverting price process model, as well as externally generated price scenarios;

User-defined scenarios - Valuation and outage scenarios may be performed based on simulations stored in file, allowing input of user-supplied scenarios generated by independent models.

@ENERGY/Power Generation 2.0 incorporates physical constraints such as ramping time, shutdown time, and minimum on and off times. Additionally, these tools realistically model operational efficiencies, constraints, and costs directly.


@ENERGY/Power Generation 2.0 is available today through FEA as a Microsoft Excel add-in. For more information call 1+ (510) 549-8702. Come visit FEA at the Energy Risk USA tradeshow in Houston, Texas on May 18 & 19, 2004, on the first level of the show floor, Discovery.

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