DC Energy

THE SCOOP

Nitty gritty

 

Founded in 2002, DC Energy is a trading firm that uses rigorous analytics to capitalize on investment opportunities in energy markets, most commonly in electricity.  In starting the company, CEO Dean Wilde took the same philosophies that he uses to run his business strategy consulting firm, Dean & Company, and applied them to trading and asset management.  More specifically, DC Energy uses in-depth analytics to make investments in the energy markets that have a sustainable and superior return on investment.  Wilde told Harvard College Investment Magazine in 2005, "We believe that a granular understanding of the fundamentals can identify and create value in business."


After starting the company with just eight people, Wilde now leads a 70-person shop based just outside Washington, D.C.  The firm buys and sells power each day, places millions of trades each year, and manages billions of data records.  How is it so successful?  By being picky. Unlike most larger investment firms, DC Energy targets specific market positions opportunistically as opposed to making highly leveraged market bets amplifying narrow spreads.

What's more, the company is structured around markets, not functions.  Employees at DC Energy work across all aspects of an investment, including strategy development, implementation, execution and portfolio development.  The firm's philosophy is that breaking people up according to function hinders idea flow and teamwork.  DC Energy is big on both, boasting on its web site that its employees do not make decisions in a vacuum, and that the success of the firm as a whole-not individual achievement-drives financial rewards.

In hypothesizing about how Enron managed to fool investors for as long as it did, many suggested that it was a result of the confusing nature of the energy trading business.  In other words, no one could understand how Enron actually made money in the first place, so figuring out that they were making it illegally was especially difficult.  DC Energy CEO Dean Wilde took a stab at explaining what it actually means to trade energy, in a 2005 interview with Harvard College Investment Magazine: "The inherent and underlying economics of these markets drives dramatic price changes both over time and across geography.  As demand for electricity shifts from moment to moment, the incremental cost of supply can change considerably.  Power generation plants are connected to demand pockets through a transmission grid, and just like a traffic jam during rush hour, this grid frequently becomes congested, causing large price differentials between different locations at any point in time.  People buying and selling power would like to hedge these risks, and they would like prices driven lower by competing suppliers.  This is where DC Energy fits in."  DC Energy specializes in these power price differentials.  It focuses on having outstanding analytical tools to predict and value congestion and power price risk so it can identify opportunities as readily as possible.  Given its competitive positioning, DC Energy advocates for increased competition at the wholesale level and increased market transparency and liquidity.  Competitive and transparent pricing is absolutely essential for the future of power markets.  By being able to anticipate and price future events efficiently is how, in the words of Dean Wilde, "we provide value to the market, and we sustain ourselves by, on average, buying low and selling high-easier said than done in these volatile and complex markets."

Sounds like complicated stuff.  But CEO Wilde says there's something even more challenging: Finding talented people.  He told Harvard College Investment Magazine that recruiting qualified candidates is the "toughest job that we have."  Once DC Energy finds people it wants to hire, it turns to growth, which Wilde says is achieved at his firm "by giving them exciting opportunities, a lot of responsibility, and very attractive compensation."

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DC Energy


8065 Leesburg Pike, 6th Floor
Vienna, DC 22182-2733
Phone: (703) 506-3901
Fax: (703) 506-3905
www.dc-energy.com

STATS


  • Employer Type: Private
  • CEO & Managing Director: Dean Wilde
  • 2013 Employees: 70

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