A Shakeout in a Shaky Bidness?
Karen,
Now that one was below the Beltway.... Bravo!
.......................................................
riskcenter.com
February 28: Enron’s Collapse To Have Grave Implications For Energy Industry
Location: Houston
Author: RiskCenter Staff
Date: Thursday, February 28, 2002
Enron’s bankruptcy will have a “profound impact” on gas and power markets for years and will generate a smaller, more cautious breed of energy marketers, a veteran industry analyst warned.
“At its core, the Enron matter has cast a morbid shadow on the integrity of all participants in the natural gas and electric power markets,” Arthur Gelber, president of Gelber & Associates, said in an industry brief this week. “Enron has delivered one more blow to a tainted business sector, a sector that appears to lack the important ingredient of integrity.
“If the general population of North America is expected to willingly entrust the supply of natural gas and electricity to unregulated energy providers, those of us who are in this business must provide the product of integrity.” He said Enron “represented the dominance of the large company in the energy services sector” and for the past several years was the largest provider of gas and electricity in North America.
In hindsight, however, “the bigness Enron portrayed also is associated with misdealing, self-dealing, and deceptive accounting,” Gelber proclaimed. As a result, “the market will shy away from the complexity embodied by such bigness.” Instead, Gelber predicted that “smaller and more specialized ‘boutiques’ will return to favor”—marketing companies that “do not have any other agenda than being compensated for helping customers make wise and profitable decisions regarding commodity pricing, asset management, price volatility mitigation, transportation and transmission services and contractual matters.”
Also in response to the Enron debacle, Gelber predicted that gas and power marketers will begin to “shy away from relationships where there is a hint of a conflict of interest.” For example, Gelber insisted there is “no way a service provider can have a client’s best interest in mind if that same company is involved in the purchase and sale of energy commodities. For effective decision making in the volatile energy market, a new population of providers will sit on the customers’ side of the table—without the inherent conflict of interest involved in being an advisor while simultaneously sitting across the table in a negotiation for the purchase or sale of an energy commodity.” |
