Collapse

Dominion Resources, which up until now has largely avoided the collapse in energy stocks, saw its shares tumble 10% Monday to $52.33 in response to a reduced earnings outlook for 2003. The prospective reduction will come mainly from a pending equity sale that is designed to strengthen Dominion’s balance sheet and debt coverage ratios to meet stricter standards from the credit ratings agencies, which are concerned with the heightened risk in the energy industry.

Enron Corp.’s collapse created a tidal wave, stormy enough to cause a “sea change” in the industry, an energy consulting firm asserts in a new report. With the changes come the “traumatic” phases: first is shock, disbelief and denial, and the distancing by other companies. Soon after, the “wave of senior management head-rolling begins.” Then there is chaos — and that’s where the industry is now.

Enron Corp. has put 12 major energy assets, including Portland General Electric, Transwestern Pipeline, Northern Plains, Citrus Corp. and many other international assets, which make up nearly all of what is left of the company, formally on the auction block. The company has extended invitations to potential bidders to visit electronic data rooms containing information about its most valuable businesses and has executed confidentiality agreements.

Without ever once mentioning the financial collapse or scandal that has pervaded Enron Corp., President Bush last Thursday called on federal regulators to mete out stiffer punishments to corporate officers who abuse their positions and provide “grossly inaccurate” information to investors. Bush also said he favored the creation of an independent board to oversee the accounting profession.

Without ever once mentioning the financial collapse or scandal that has pervaded Enron Corp., President Bush Thursday called on federal regulators to mete out stiffer punishments to corporate officers who abuse their positions and provide “grossly inaccurate” information to investors. Bush also urged regulators to create an independent board to oversee the accounting profession.

The long term effects of Enron’s collapse “will be good, not bad,” in that it will spur changes to “put corporate governance back on track,” Alan Greenspan, chairman of the Federal Reserve, testified before Congress Wednesday. The problems with Enron will result in a necessary restructuring of corporate governance that “will be favorable to the long term outlook.”

As a further fallout from Enron Corp.’s financial collapse, three Democratic senators from the West Coast introduced legislation in Congress last week to step up the regulatory oversight of the energy markets to ensure full disclosure of all energy transactions. They plan to offer the measure as an amendment to the comprehensive energy bill, which the Senate is expected to take up after the Presidents Day recess.

Blame it on Enron Corp.’s collapse or commodity prices that have dropped from the heavens, but whatever the reason, utility executives are rethinking their once lofty notions of the merchant energy side of the business and instead have begun to turn more attention to their core generation businesses — a strategy change that has occurred in just one year.

Blame it on Enron Corp.’s collapse or commodity prices that have dropped from the heavens, but whatever the reason, utility executives are rethinking their once lofty notions of the merchant energy side of the business and instead have begun to turn more attention to their core generation businesses — a strategy change that has occurred in just one year.