Customers & Industries: Cinergy

@RISK Helps Utility Balance Acquisitions and More

  • Industry: Utilities
  • Product(s): @RISK
  • Application: Application: Acquisitions Analysis

Summary

At Cincinnati-based Cinergy (now Duke Energy Corporation), Soubhagya Parija uses @RISK to model decisions involving all of the utility's potential transactions with other companies, especially acquisitions.

I take @RISK everywhere I go in the company.
Soubhagya Parija, Cinergy

Traditionally, utilities have been viewed as staid, slow-moving companies. But Cincinnati-based Cinergy's Soubhagya Parija says that image is suddenly obsolete. The advent of deregulation has driven most utilities into the fast lane, where decision makers must be poised to turn on a dime and change direction. Soubhagya is a senior analyst in Cinergy's MBA Rotational Program. His MBA is from Indiana University's Kelley School of Business, where he first became acquainted with @RISK when he studied decision science with Wayne Winston for two semesters. Soubhagya's job takes him to many departments in Cinergy (now Duke Energy Corporation), and his decision-support skills travel with him.

Billions of dollars ride on the decisions made in the department where Soubhagya is currently assigned, Cinergy's Corporate Development Department. He uses @RISK to model decisions involving all of Cinergy's potential transactions with other companies, especially acquisitions. "In our evaluations of these possible transactions," he says, "we are using data on the value drivers, return on capital, and the value at risk of the target company. The information comes from public and other sources outside the target company, and the goal is to reveal real asset values.

"Right now my models are uncomplicated," he says, "because we try to limit the number of parameters and we're always working with incomplete information." Soubhagya says that for him, @RISK's greatest strength is its intuitiveness. "We're not really targeting a specific number--yet we're looking for results we can be at least 90 percent certain of."

At the same time deregulation has cranked up the speed of the utilities' business environment, it has also expanded the geographical reach of regional utilities like Cinergy. The company now buys and sells power on the wholesale markets in the eastern half of the United States. Together these factors will continue to present new analytical challenges to Soubhagya, not only as he streamlines the asset valuation process at Cinergy but as he travels to other departments dealing with other functions of the company. Decision times are always short, and the stakes are always high. Noting the ease of @RISK's interface and its immediate adaptability to almost any kind of business question, Soubhagya says, "I take @RISK everywhere I go in the company."

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