The Enron calamity dragged down many energy company stocks Wednesday and the stocks of some financial institutions, particularly Citigroup and JP Morgan Chase & Co., which were working on the now defunct $8.4 billion Enron-Dynegy merger. Many energy companies, however, said they have had weeks to prepare for this and have reduced their Enron exposures to manageable levels.

Columbus, OH-based American Electric Power Co., which is among the top three largest gas and power marketers by volume in North America, said it reduced its energy trading exposure to Enron to less than $50 million over the past few weeks. AEP shares fell 5% Wednesday to $40.44/share. A spokesman said that several weeks ago the company changed the types of transactions it would do with the Houston-based company and tightened its credit requirements as Enron’s finances and share price took a beating.

Mirant, another top-10 energy marketer, said its current pretax exposure to Enron is $50 million to $60 million. It’s shares fell 6% Wednesday to $23.40.

Duke Energy North America, meanwhile, said it took “proactive steps” to limit its credit exposure to Enron in recent weeks. Spokeswoman Becky Nash said the company’s current exposure to Enron was less than $100 million, an amount that she said wouldn’t imperil Duke if not fully recovered. Duke Energy also doesn’t expect the Enron collapse to have a major impact on the industry. “We feel the market is bigger than any one player,” and that it is “resilient,” Nash said. She noted that Duke Energy currently was assessing the market opportunities that could arise for the company as a result of Enron’s misfortune.

Sempra Energy said it would love to get its hands on some of Enron’s assets. A spokesman wouldn’t specify which assets were of interest. Sempra shares, meanwhile, dipped 1.5% to $22.70.

El Paso Corp. shares cascaded down by more than 7% to $44.91, but it said it anticipates an Enron collapse will have minimal effect on its own company (see Daily GPI, Nov. 9 ). “Over the past several weeks, we have been systematically reducing our position with Enron. Any new deals with Enron will have to be supported with cash collateral,” said spokeswoman Kim Wallace.

El Paso said in a statement that it foresees “no material disruptions in the energy trading markets resulting from Enron’s debt downgrades or the potential of an Enron bankruptcy filing.”

“El Paso’s maximum natural gas and power net trading exposure to Enron is approximately $50 million,” said El Paso CEO William A. Wise. “Our earnings outlook remains strong, and we do not expect any adverse earnings impact from Enron’s difficulties. In addition, our merchant energy business is gaining market share by providing customers with reliable fuel supply services and high-quality risk management products throughout North America.”

Ralph Eads, president of El Paso Merchant Energy Group, previously had indicated that El Paso was profiting from what he called the “brouhaha” at Enron. “Yes, we’re gaining market share because certain people don’t want to do as much business with Enron, so it’s coming our way.”

Eads also had said he doubted that an Enron collapse or bankruptcy would have that much effect on the overall market. “If Enron goes away…we don’t see the market missing a beat.”

Northwest Natural Gas, whose stock was down 2% yesterday, said it would go through with its purchase of Portland General Electric from Enron (see related story in Power Market Today).

Aquila Inc. shares tumbled more than 5% to $18.21 Wednesday, but the company insisted it has been reducing its exposure to Enron for the last six to eight weeks. “At this point, if we have any, it’s minimal,” said Aquila spokesman Al Butkus. “It’s a sad commentary on a large corporation, but it’s probably not going to have much of an impact on the trading market,” Butkus added. “There are enough big players out there. They will just pick it up. Enron had about 20% of the market, but there are some equally large players out there.

“It’s actually good for our business,” he said. “The market will go on with or without Enron. It just means more for all the others to divide up. The biggest benefactor immediately is [IntercontinentalExchange]; their trading volumes were up 30% last week, and I suspect with EnronOnline going down today they probably will be up 30% or more this week.”

However, several other major energy companies will have to suffer through some significant downward pressure on their stock until investors can digest the Enron calamity. Calpine shares took a major beating Wednesday, dropping more than 9%, or $2.10, to $21.19. Constellation Energy Group fell 6% to $22.85. Reliant Energy shares fell nearly 5% to $25.96. Williams was down more than 6% to $27.05.

Industry consultant Ben Schlesinger of Schlesinger & Associates said the downfall of the market’s largest player will require some significant adjustments, but the marketing and trading industry will remain enormously competitive and healthy with or without Enron. “People in the business have had weeks to prepare for this and make other arrangements with respect to their physical and financial trades, particularly their long-term trades,” he said. “The gas industry will soldier on and continue to grow.

“It’s too bad with all the creativity and the leadership in so many ways that Enron brought to the business that this had to come to pass,” said Schlesinger. “They were a real collector and distributor of talent and really great ideas. You look at the innovations, particularly in the risk management area, and other trading and marketing mechanisms — Enron was really terrific.”

Other trading firms could see some of that talent come their way. “There are 20,000 people at Enron who once thought they had a great future and now they don’t; it’s very sad,” said Aquila’s Butkus. “We have been receiving resumes for several weeks now, more resumes than we’ve ever received before from Enron people, and we are looking at them one by one,” he said. “There are a lot of good people over there, both domestically and internationally. We’re growing the market at 25% per year here in the United States, so we could use more people in this key marketplace.”

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