The sudden bankruptcy of Enron Corp. has fueled a great deal of speculation about what caused the company's fall and what effect it will have on competitive energy markets. Here's a look at what major U.S. newspapers, regulators and experts are saying on these topics:
Enron's fall was the result of unique actions and circumstances - it does not demonstrate weakness in the energy supply marketplace. Marketplace forces worked as they are intended, and energy markets remain vibrant.
Regulators and Elected Officials
"The demise of Enron has not shaken the commission's confidence in moving toward competitive markets." said FERC Commissioner William Massey. "If anything, I see it as really unrelated to deregulation...The commission crossed the divide [in moving toward restructuring] with Order 888, and once you cross that divide, it seems to me that you have the obligation to make the markets work as well as possible."
Electric Power Daily, Dec. 5, 2001
"We have to look carefully at the causes of consequences of Enron's collapse," (Sen. Jeff) Bingaman (D-NM) said. "But I don't see anything in this that would keep us from moving forward with open transmission access and these types of things."
New York Times, Dec. 4, 2001
In the face of Enron's collapse, the largest bankruptcy in U.S. history, there were no price spikes, no trading panics, no electricity outages and no gas shortages. On the contrary, we've added some 51,000 megawatts of electricity this year and some 99,000 are scheduled to come on line in 2002. That's more power added to our economy than at any time in our history.
U.S. Secretary of Energy Spencer Abraham, in the Washington Post, Jan 14, 2002
Rep. Christopher Cox (R-Newport Beach), a member of the House Energy and Commerce Committee, rejected the notion that Enron's meltdown should cause Congress to rethink deregulation. "Enron could have been in the Hula-Hoop business and done exactly the same thing," he said.
Los Angeles Times, Jan. 22, 2002
Wall Street Analysts
"The trading company did not bring Enron down. The energy outsourcing and pipelines did not cause Chapter 11. It was an egregious and overly aggressive financing strategy that blew up in their faces and everyone else's," said John Olsen, director of research at Houston securities firm Sanders Morris Harris.
Orlando Sentinel, Dec. 5, 2001
Players...so far [have had a] successful, adjustment period following Enron's collapse ... the firms that remain are rapidly solidifying new relationships between them and with large customers," said Andre Meade, head of utility research for Commerzback Securities in New York.
Electric Power Daily, Dec. 5, 2001
Newspapers and Trade Journals
The bond rating agencies learned and acted more quickly than any regulatory agency could have. Customers and clients, with a bottom line at stake, acted even more quickly, pulling back from transactions. The markets in which Enron dealt are still operating, with little volatility and strong competitors.
Orange County Register, Editorial, Dec. 3, 2001
Those on Wall Street consider re-regulation of the energy trading business an idea born out of a misunderstanding of why Enron failed and one that would do more harm than good.
Associated Press, Dec. 1, 2001
It strikes us that Enron was partly a victim of its own success. É Enron was earning thinner margins in the energy-trading business it pioneered. The new industry quickly became too competitive and transparent to afford any windfalls, just as deregulation admirers would have predicted.
Wall Street Journal, Editorial, Nov. 30, 2001
Enron toppled from elite global player to penny stock primarily because of the way it ran its business, not because it pushed deregulation. That's hardly an indictment of a process that revolutionized air travel, long-distance service, banking and trucking.
Fort Worth Star-Telegram, Dec. 7, 2001 - Mitchell Schnurman column
Yet while Congress is planning hearings to look into Enron's meltdown, the focus for now appears to be on issues of accounting and financial disclosure, rather than the energy markets themselves. And the Federal Energy Regulatory Commission's main efforts currently are aimed to enhance, rather than diminish, energy market competition.
Dow Jones Newswires, Dec. 7, 2001
The trading system that Enron pioneered won't disappear with Enron. It's striking that its bankruptcy has barely rippled the energy markets; business has flowed to the dozens or so other firms that also offer trading platforms for wholesale electricity É That's the virtue of a competitive market: An Enron can disappear but life goes on because people can find other places to trade.
Wall Street Journal, editorial, Dec. 12, 2001
Coming on the heels of California's painful power crisis, the Enron debacle has seemed to some to be emblematic of the failure of electricity deregulation. Nonsense. The financial troubles that undid Enron are not unique to the energy industry and are not the result of deregulationÉ In fact, Enron's demise should be taken as an opportunity to strengthen the move toward competitive power markets.
Vijay Vaitheeswaran, of the Economist, in the New York Times, Dec. 15, 2001
Economists and Academic Experts
"It was a nonevent," said Jane Hall, an energy economist at California State University, Fullerton. One of the reasons for that, Hall and other experts said, was that Enron was a trader and marketer - not a generator. Its demise, the result of undisclosed debts, overstated earnings and a creeping suspicion among its trading partners that it was a financial house of cards, didn't put one kilowatt of power in jeopardy.
Orange County Register, Dec. 9, 2001
The most important fact about the fall of Enron hardly has been noted in the media: The disintegration of such a large company that so dominated its markets should bring bedlam to its suppliers and customers. Yet power and gas prices remain low and stable. They continue to be driven by supply and demand, both where Enron traded and where it did not.
USA Today, Robert J. Michaels Essay, Dec. 10, 2001
