The National Energy Marketers Association (NEM) on Wednesday named two energy executives to lead an industry task force that will be dedicated to reestablishing stability and financial credibility in North American wholesale energy markets. Michael Walker, senior vice president of Caminus Corp., and Lee Taylor, senior vice president of Prebon Energy, will head up the task force that is expected to take a leadership role in addressing specific accounting issues.

“The formation of the task force on valuation, risk management and accounting is a vital part of NEM’s greater effort to encourage quick action by our members in ensuring the continued viability and stability of the energy markets following Enron’s collapse” said Craig Goodman, NEM president. He said Walker and Taylor offer an “ideal combination of industry knowledge and expertise” to lead NEM in educating industry, Congress and the investment community to make informed decisions. “In the end, we all want to have an industry that is healthy, vibrant and serves the best interest of the U.S. consumer.”

The task force is expected to concentrate on several industry-specific accounting issues to forge a consensus on properly valuating energy trading contracts, including a review of Financial Accounting Standards Board (FASB) 133. It also will consider appropriate disclosure rules for companies’ physical and financial trading activities, and will focus on educating the investment community on the effective use of energy derivatives to manage corporate risk in the competitive wholesale energy markets.

Walker, who once served on the executive committee of Enron’s wholesale energy trading business units, heads up Caminus’ North American Strategic Consulting Unit. He said, ” the bar has been raised with FASB 133 and the SEC disclosure guidelines of Jan. 22, 2002. Energy producers, marketers and traders now need improved internal processes that are supported by software to comply with the SEC’s standards. The main goal of this task force will be to collaborate with auditing and rating firms to develop standard methods of valuation and accounting practices that will enable companies to provide consistent and complete information to the investment community.”

NEM represents wholesale and retail energy marketers as well as suppliers of energy-related products, services, information and technologies throughout the United States.

Meanwhile, the seven-member FASB, responsible for establishing and interpreting generally accepted accounting principles, said Wednesday that it plans to issue new rules to strengthen financial oversight before August. Edmund Jenkins, chairman of the FASB, said in a conference call that the “basic issues” have been resolved, and the effective date for calendar year companies would be Jan. 1, 2003. Changes are expected specifically on special purpose entities (SPEs), which are at the heart of Enron’s collapse.

Jenkins said many SPEs often exist in complex partnerships where those with the highest risks and rewards are not easily identified. The FASB is drafting guidelines to offer more detailed SPE accounting. Ray Simpson, a FASB project manager, said FASB would focus on pension plans, investment companies and broker dealers,. “Those entities should account for SPEs the same as everybody else does.” The requirements would not change, however.

Already this year, FASB has proposed ways to make it more difficult for companies to keep SPEs off their books. FASB is proposing that independent third-party investors be required to hold a 10% stake in a SPE, up from the current 3% stake.

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