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Enron Mail |
Energy Cos Limit Business With Enron After 10Q -Traders By Mark Golden 11/20/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) NEW YORK -(Dow Jones)- Many energy trading companies were unwilling to sell power and natural gas for next day delivery to Enron Corp. (ENE) Tuesday morning, a result of heightened credit concerns following the release of Enron's quarterly financial report Monday, traders and other sources said. For weeks, companies have limited both buying and selling with Enron for future deliveries. But for the first time since Enron's troubles began a month ago, energy companies weren't selling to Enron in the spot markets for fear that Enron might not be able to pay its bills as soon as next month. "It's pretty well accepted in the industry that people are staying away for now," said Charlie Sanchez, energy market manager for Gelber & Associates in Houston. Traders at all of the major companies contacted said they couldn't sell to Enron Tuesday morning. Several spokespeople for energy companies confirmed the situation, but declined to say so on the record. "Nobody will take Enron," one western electricity broker said. After struggling, however, that broker eventually found a utility that was willing to sell to Enron Tuesday morning. Calpine, a prominent independent power producer and trader, said it was willing to sell power to Enron. "We continue to sell power to Enron and are monitoring the situation closely," spokeswoman Catherine Potter said. The situation Tuesday morning was fluid. One utility that refused to sell to Enron in the morning was willing to do so in the afternoon, a person at the company said. That company's trading, however, was still limited to the spot markets. Credit concerns about the once-dominant energy trading company were heightened with Enron's filing of its third quarter annual report Monday evening with the U.S. Securities Exchange Commission. Enron may have to pay $690 million on a note that became a demand obligation with the company's most recent credit-rating downgrade, Enron said in Monday's filing. The company also warned that its profits in the fourth quarter could be hurt by credit concerns, a decline in asset values and reduced trading activity. "The 10Q in and by itself is a document that could raise concerns," Fitch analyst Ralph Pellecchia said. "We have a lot of questions outstanding relative to disclosures that were new to us and their strategies of how they are going to manage the situation." Companies are willing to buy from Enron in the spot gas and power markets, because taking delivery on commodity and paying for it a month later poses no credit risk for the buyer.
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