IES Business Philosophy
- Reduce risk and increase earnings for every client.
- Understand and support the political ascension of each client.
- Provide each client with a unique competitive advantage that allows the client to exceed expectations.
IES achieves its business objectives for three important reasons:
- IES has a thorough knowledge of state of the art risk management, hedging and trading process and organizational structures, developed through 20+ years of successful project development experience in energy markets.
- IES is a people first company. Helping our clients achieve their goals is our primary objective.
- IES is the creator and sole owner of proprietary risk management technology that has been recognized by the University of Chicago, the International Association of Financial Engineers and the International Association of Non-Linear Analysts for its outstanding contribution to the field of financial science. This technology, available only from IES, provides a competitive advantage that no other firm can offer.
IES has had steady positive growth in its consulting and product development businesses since the company's inception in July 1995. The company's services fall under one of the following three categories:
For more information regarding the full line of consulting services offered by IES, please contact us.
- Portfolio management – the company provides hedging and trading services for natural gas, heating oil and crude oil. Even though prior performance is no guarantee of future results, by using the company's proprietary new analysis technology, ADEPT, and the company's advanced risk management systems, the company projects a profitable earnings-to-risk ratio in this program. For more information on these services, please click here.
- Market information services. IES provides real-time pricing services via the internet using ADEPT. These services successfully help hedgers and traders stay on the right side of either the long-term or short-term trend. For more information on these services, please click here.
- Consulting services: The company's energy consulting services include the following:
- Giving Management Maximum Control of Risk with a Minimal Time Commitment. IES has helped several power trading operations develop a daily Value at Risk (VaR) report that accurately summarizes the company's risk in a single dollar figure, along with Management Action Triggers that can be invoked if risk exposure exceeds management's pre-approved thresholds. This approach gives senior management complete control of the company's risk exposure while requiring a minimum of senior management's time. For more information on the requirements of such an achievement, please view the enclosed White Papers.
- Development and Implementation of Policies and Procedures. IES has helped several energy trading operations develop and implement their energy risk management and energy portfolio management Policies & Procedures manuals, guidelines, related documentation and training programs.
- Hedging Forward Curves, Optimizing Financial-to-Physical Handoff & Revenues. IES helped one power producer's energy trading operation increase earnings on their portfolio by 40% over 8 months, by showing them how to do a better job of managing their forward curve and most especially their financial-to-physical handoff during the last two weeks prior to delivery.
- Hedging the Economic Risks Associated with System Lambda, Keeping Energy Traders on the Right Side of the Trend. IES has developed a new, advanced modeling process that helps energy traders stay on the right side of the trend and helps power producers hedge the economic risks associated with future trends in the upper-end components of their system lambda. This new modeling process has been coded into a proprietary software program called Dynamic Phase Transitions (DPT).
- Identifying and Optimizing Imbedded Options in an Energy Portfolio. Electric power producers' existing portfolios were developed in an environment where reliability and optimization of generation assets were the prime objectives. Electric power portfolios are complex portfolios with derivative options embedded in them, although many utilities mistakenly believe that they do not use financial derivative products. IES specializes in identifying these imbedded options and optimizing their use as part of maximizing earnings and minimizing risk in an energy portfolio.
- Optimizing Relative Value. Managing price risk in any market requires careful consideration and planning. However, energy markets require more than just careful consideration and planning, they require an understanding of the relative values of various BTU assets and the relative values of input fuels to electric power products. IES's proprietary modeling processes and software provide this understanding through continual and intricate technical measurement of price activity in each liquid component of an energy portfolio, as well as continual and intricate technical measurement of the relative values between those components.
- Ex-Post Validation & Verification of Trading Strategies. IES has extensive experience and expertise in the ex-post validation process, which overlays actual returns on top of expected returns to validate the assumptions of energy risk measurement models, clearly identifying whether or not the firm's trading strategies are working. This is a critical step in ensuring that the firm's management is not being misled by under-reported risk. Ex-post validation and trading strategy verification is also a vital tool for optimizing the use of the firm's assets. Using these tools, management can effectively direct resources to trading strategies that meet the firm's earnings objectives and volatility standards.
- Improving VaR Accuracy. IES conducted research on VaR reporting for energy trading operations and found that many power producers and energy traders would like to have a more accurate and more meaningful VaR report that takes into account the high volatility in electricity spot market prices. IES is addressing this need by developing new, physics-based financial management tools that provide accurate option pricing and VaR for electric power producers and energy traders, with no need for volatility measurements or probability models.
- Expanding Trading Capabilities in Energy Markets. IES recently completed work on the prototype of a new software program, the Payoff Advantage Tool (PAT). PAT identifies financially equivalent option payoffs on opposite sides of different energy and currency markets. This is a useful aid for power producers and energy traders who swap natural gas for electricity, trade weather, or trade BTU units using sophisticated financial vehicles. PAT is also helpful in identifying financially equivalent transactions that can provide the same wealth using more liquid vehicles, which expands an energy trader's capabilities within their own marketplace.
- Ongoing Education and Consulting Services. IES offers a free “Friendship service” for existing and prospective clients who wish to discuss energy risk management and energy portfolio management issues, concerns, future needs, etc. IES also sends out email updates as the company continues to publish and distribute new white papers, develop new information services and products.
IES Press, a division of IES, published two books in 1998: Beliefs-Preferences Gauge Symmetry and Replication of Contingent Claims in a General Market Environment and Foundations of Foreign Exchange Option Symmetry. Amazon, Barnes & Noble, Baker & Taylor, Global Investor, NUMA, and numerous other Internet and international book distributors are currently distributing these two IES Press books.
IES made the decision to publish early in 1998 when a book co-authored by Dr. Kholodnyi (Foreign Exchange Option Symmetry, World Scientific Publishing Co., 1998) sold over 2,600 copies in scientific markets worldwide.
The International Association of Financial Engineers, in March 1997, honored IES's new scientific discovery, the General Kelvin Transform Symmtery, the basis for the Payoff Advantage Tool. The heart of this new understanding of option relativity is found in Foundations of Foreign Exchange Option Symmetry. This tool, originated and developed by IES, is the first application of certain notions of physics to finance.
The book, Foundations of Foreign Exchange Option Symmetry, is standard curriculum at the University of Chicago. The work achieved this status in record time.
IES has also been honored by the International Association of Non-Linear Analysts for the identification of a gauge-symmetry for finance. This revolutionary discovery is found in Beliefs-Preferences Gauge Symmetry Group and Replication of Contingent Claims in a General Market Environment.
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