Mact - more info to consider.
Given ENE's recent dilemmas and credibility problem, can you even believe ENE let the following happen through "clerical" oversight? If they can't even sort and distribute mail, which in turn, leads to negative press like below, during crisis moments like these, it makes you wonder whether you really want to jump in long at this time.
Enron Energy Services Says It Has Met Demands of Power Industry Group
By Jeffrey Krasner (Boston Globe)
Oct 26, 2001 (The Boston Globe - Knight Ridder/Tribune Business News via COMTEX) -- The retail sales subsidiary of Houston energy giant Enron Corp. faced expulsion last week from the New England group representing power generators, marketers and distributors. The sales unit had failed to meet bonding requirements intended to protect market participants and the group itself from unpaid bills.
ISO New England, which operates the power grid throughout the six New England states, urged Nepool, the power industry group, to "initiate termination proceedings" for Enron Energy Services Inc., according to a letter obtained by the Globe.
An Enron spokeswoman yesterday said the company had satisfied Nepool's requirements, and blamed the threatening letter on a series of administrative oversights, including the failure of ISO New England to warn Enron of previous
instances when the bond fell below required levels.
"It was an administrative snafu," said Peggy Mahoney, a spokeswoman for Enron.
"It's fixed. It's no big deal. We didn't get the paperwork in [on time] because it got sent to the wrong desk. It was taken care of on Friday."
According to the letter, a Nepool participant faces termination if it has failed to meet its bonding requirements three times over the previous 12 months.
"Having three defaults to trigger that letter does not happen frequently," said Ellen Foley, an ISO New England spokeswoman.
In the letter, ISO's chief financial officer, Edward McKenna, said his organization "has been in contact with Enron Energy Services through multiple telephone communications, and to date the financial assurance has not been cured."
But Mahoney said Enron never received written notification of its previous "financial assurance" defaults, which were corrected almost immediately. Therefore, she said, the company was unaware that the current default was the third, which begins the expulsion proceeding. In addition, she said, the current default notice was sent to the wrong person, creating the delay that resulted in the letter.
"We're working with ISO New England to figure that out," she said.
The recommended termination is an embarrassment to Enron because the firm's director of state government affairs, Daniel W. Allegretti, is the chairman of Nepool's Participant Committee, which organizes and oversees the major membership meetings in the organization.
"This is not that unusual within the pool," said Allegretti. "I frequently receive notices of technical defaults."
As far as posting the new bond to correct the situation, he said, "We were two and a half days late in submitting paperwork."
The incident also comes at a particularly sensitive time for Enron.
The parent in Houston has been the subject of a financial scandal in which the firm's chief financial officer, Andrew S. Fastow, is accused of profiting from partnerships he oversaw that engaged in billions of dollars of transactions with Enron. The Securities and Exchange Commission is probing those transactions, the company said Monday. Enron placed Fastow on leave Tuesday and installed a new CFO.
Enron's stock has plunged amid ongoing revelations about the partnerships and their impact on the company's financial strength. The company reduced shareholder equity by $1.2 billion after terminating transactions by one of the partnerships that had been headed by Fastow, according to The Wall Street Journal. Enron lost $618 million in the third quarter.
Yesterday, Enron's shares closed at $16.35, down 6 cents, on volume of 39.1 million shares.
(c) 2001, The Boston Globe. Distributed by Knight Ridder/Tribune Business News. |
