First Days in NYC by Mitra L. '07

Hi everyone. I’m writing this entry from NYC, where I have Internet access at the office but not in my apartment. It’s been rough, as you can imagine. (Not to mention my gas stove, which I don’t know how to ignite. HELP!)

Anyway, I’m externing at an economic consulting company, along with 8 other MIT students. Apparently this office has the most MIT externs of any in the entire program — NICE. There are freshmen, sophomores, and juniors here, and we come from all sorts of majors — Course 2: MechE, Course 6: EECS, Course 14: Econ, Course 16: Aero/Astro, Course 18: Math, etc.

The project I’m on deals with mutual funds. Since so much of what is done here is litigation-based and strictly confidential, I can’t discuss the details. After I left the office yesterday, I met up with some other MIT students who are working as externs on Wall Street, and we had dinner together in the Village (The Village? the village? The village? And was it east or west? “East Village” sounds right, but I remember going West to get there. GAHHH). We all got off from work pretty late, but decided to celebrate our first day on our jobs by going out to a restaurant in our work clothes. Along with another fifty thousand people in this city.

I’ll try to find out what else I can tell you about my job; if I am capped at this amount of information, I’ll try to get some other MIT externs to write about what they’re researching, so you’ll get some idea of what we do here. Ciao!

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THE NERA WEEKLY :: 05.JAN.2006
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Dear NERA Weekly Subscriber,

Welcome to The NERA Weekly, our complimentary newsletter detailing the latest publications, events, and client case/project work featured on our website each week. We hope you enjoy it and share items of interest with your friends and colleagues. For more of our latest thinking, please visit us at http://www.nera.com.

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NERA Analysis Cited in Congressional Budget Office Confirmation of Original FAIR Act Claims Cost Estimate
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Following a detailed analysis, the Congressional Budget Office (CBO) has concluded that a Bates White report projecting substantially higher potential costs of claims against a proposed national asbestos trust fund contains no new information that would cause the CBO to revise its own cost estimate. Experts from NERA Economic Consulting provided the CBO with details of their evaluation of the report, and testified during a related Senate hearing in November 2005. The proposed Fairness in Asbestos Injury Resolution (FAIR) Act would establish a $140 billion trust fund to compensate victims of asbestos exposure and, in theory, end hundreds of thousands of asbestos injury lawsuits. However, the Bates White report had suggested that the cost of claims could be between $300 billion and $695 billion. In reaffirming its findings, the CBO cited NERA’s analysis and echoed other themes of NERA’s Senate testimony.

Learn more: http://www.nera.com/PressRelease.asp?pr_ID=2698.

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OUR LATEST THINKING
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It Matters Which Way You Slice It: Risk Management for the 2005 Procurement Auction of Italy’s Acquirente Unico

The Acquirente Unico (AU), the single buyer in Italy responsible for supplying energy to retail consumers who are not eligible for competitive supply, asked NERA to assist in the development and implementation of mechanisms for risk-covering within its electricity purchasing strategy for 2005. In this article from The Electricity Journal, NERA Senior Consultant Hamish Fraser and AU Portfolio Optimization Manager Salvatore Lanza discuss key risk management considerations concerning the 2005 procurement. The authors analyze the risk characteristics of three approaches, and conclude that the most appropriate contract form for the AU would be a one-way CfD (contract for differences) arrangement — in which an energy producer will receive a fixed price for capacity, less an adjustment factor to cover the difference between the actual market price of the energy at the time it is delivered and an agreed-upon fixed energy price. The authors also analyze the most appropriate parameters for and quantities of these contracts. Learn more: http://www.nera.com/publication.asp?p_ID=2697.

New IRS Service Fee Regulations: The US Will Go First, Other Countries Will Be Forced to Follow

In 2003, the US Internal Revenue Service (IRS) introduced long-awaited proposed regulations on controlled services and intangibles that are to be finalized before the end of the second quarter of 2006. In this article from Practical US/International Tax Strategies, NERA Vice President Dr. Stuart Harshbarger discusses the proposed changes to existing guidance as well as the steady stream of criticism from practitioners, attorneys, and pundits regarding numerous perceived deficiencies and potential perverse outcomes of the proposed regulations should they be implemented in their current form. Dr. Harshbarger argues that although much of the criticism does raise valid concerns, the IRS is adapting appropriately to the changing composition of US international trade flows, and that many other industrialized countries will soon be forced to follow the IRS’ lead. Learn more: http://www.nera.com/publication.asp?p_ID=2696.

Economic Instruments for Reducing Ship Emissions in the European Union

In this report, sponsored by the European Commission’s DG Environment, a NERA team led by Senior Vice President and Environment Group Head Dr. David Harrison and Senior Consultant Daniel Radov analyzes four “economic instrument” approaches to reducing emissions from maritime sources in European sea areas. Building upon earlier NERA work on behalf of DG Environment to evaluate the feasibility of various economic instruments for reducing shipping emissions, the team considers the further steps that would be involved in adopting each of these promising approaches. The report provides recommendations for the development of each approach, organized in two major categories: design elements, which are features that are specified initially and not expected to require additional review over time; and implementation elements, which are features that require implementation on an ongoing basis. Learn more: http://www.nera.com/Publication.asp?p_ID=2694.

Read related coverage in Environmental Finance: http://www.nera.com/MediaCoverage.asp?pr_ID=2695.

For more of NERA’s latest thinking, please visit: http://www.nera.com/JustPublished.asp.

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ENERGY REGULATION INSIGHTS
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European Commission Sets Competition Issues for Gas and Electricity Markets

On 15 November 2005, the European Commission published the initial findings of the Energy Sector Inquiry, launched in June 2005 in response to complaints about high gas and electricity prices, barriers to entry, and a lack of consumer choice in the EU. The Commission set out its initial findings in an Issues Paper, which NERA Senior Consultant Sean Gammons discusses in the latest issue of Energy Regulation Insights. Mr. Gammons summarizes the Commission’s findings and highlights the contractual, regulatory, and competition policy issues that will need further consideration in the next stage of the inquiry.

Read the latest issue of the Energy Regulation Insights: http://www.nera.com/Newsletter.asp?n_ID=27.

For more information about NERA’s other complimentary newsletters, please visit: http://www.nera.com/Newsletters.asp.