The value of generating change An Enron case study
Page 1: Introduction
There is little doubt that energy is central to our lives. Indeed, it is impossible to imagine our offices, schools or homes without energy. In today’s complex, competitive international market-place, it is essential that energy is provided in the most efficient way possible. Evolving industrial and consumer energy needs require dynamic supply and service organisations prepared to create change in order to ensure and improve efficiency.
Enron’s history is closely linked with market liberalisation, innovation and a willingness to embrace change - whether that be providing innovative solutions to energy needs or, more recently, investing in environmentally progressive technology. Enron is a leading integrated energy marketer of natural gas, crude oil, electricity and liquids in North America, Europe and the rest of the world. The company is the largest purchaser and marketer of natural gas and the largest wholesale marketer of electricity in North America. It is a leader in providing physical and financial natural gas and power products across Europe, and an established power marketer in the Nordic region.
As well as marketing energy, Enron has, in recent years, developed an important base of power generation plants and this capacity is growing. Enron entered the UK gas and electricity markets with the construction of a natural gas-fired power station in Teesside, which began commercial operation in 1993. The completion of a new natural gas-fired power station in Sutton Bridge in March 1999 will provide an additional, clean, reliable, low-cost source of power for the UK.
The company’s day-to-day activities are based on three core businesses:
Energy marketing - this group’s operations include the buying, selling, physical transportation and storage of natural gas, crude oil and natural gas liquids, as well as the buying, selling and transmission of power.
Risk management - this group manages risk for customers through various products such as swaps, options and fixed price contracts. In simple terms, managing risk involves protecting customers against possible fluctuations that may occur in the price of energy over time.
Finance - this group provides customers with access to low-cost capital for a variety of needs and also provides a range of alternatives for securing affordable debt and equity. For example, Enron may provide a developing company with financing to improve its factories’ use and management of energy. The loan is repaid by the resulting savings in energy costs.
This case study focuses on Enron - a dynamic company which is committed to innovation and change in order to provide solutions to the energy needs of consumers in the UK and elsewhere.