Utilities: Enron’s ripple effect

The European utilities sector has been forced into a radical reappraisal of structure and strategy following Enron’s spectacular demise. Most observers predict a period of rationalisation marked by a likely succession of mergers and acquisitions. But, as Graham Field discovers, with so few fish in the pond, targets will have to be chosen carefully

In the wake of Enron’s collapse the utilities sector is reverberating to the sound of stable doors slamming shut, as investors rush to reappraise their exposure to companies with energy trading activities. Meanwhile, Enron itself is being carted off to the knacker’s yard of Chapter 11 to a chorus of other utility companies declaring that they really had very little indeed to do with the former thoroughbred.

Nevertheless, most people involved in utilities are at pains to emphasise that the sector