Enron Pres: Still Committed to Power Generation Business
Wednesday, September 6, 2000 12:49 PM

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By James Covert
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Despite an increasing emphasis on wholesale trading
rather than asset ownership in its electricity operations, Enron Corp. (ENE,
news, msgs) will continue to develop and purchase power plants, president
Jeffrey Skilling told Dow Jones Newswires on Wednesday.
"Generation assets are essential to a successful trading operation," Skilling
said, responding to recent trade reports that the company plans to exit the
power generation business. The Houston-based energy company is "absolutely
not" selling its power plants as part of its strategy, he said.
Enron will continue to build and purchase natural gas-fired "peaking plants,"
which produce power only during times of high demand and wholesale prices,
Skilling said.
Enron has begun construction of a few such projects in the U.S. Midwest and
South, and will continue development chiefly in the U.S and Europe, he said.
"The margins are higher (in wholesale power markets) in Europe," Skilling
said. "The market there is more fractional, and that creates more
opportunities for someone who's playing across the board."
Developments in Europe, particularly in southern Europe, also offer a higher
per-unit rate of return, Skilling said.
Nonetheless, Skilling did confirm that the company isn't interested in
building larger-sized plants in any country, and that its construction goals
may not be as lofty as those of other energy companies.
"We are not interested in building base-load plants," Skilling said,
referring to large power plants that produce power in steady quantities
around the clock.
"Base load simply delivers megawatts - that's a bulky, undifferentiated
commodity," Skilling said. "But peaking plants allow us to play on the shape
of the market of that commodity."
Skilling declined to give any projections or figures related to Enron's
future development plans, saying that they weren't set in stone.
But Skilling said the company generally aims to site power plants where there
are bottlenecks in the transmission system, and that Enron isn't focused on
any one geographic region as opposed to others.
"There are companies out there saying they're going to build 40,000
megwawatts by such-and-such a date, and I don't really see how that's
possible," Skilling said. "There are just too many variables to approach
markets like that."
-By James Covert, Dow Jones Newswires; 201-938-2061;
james.covert@dowjones.com
Quote for referenced ticker symbols: ENE

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