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ACCOUNTING
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In 1985, Internorth, an Omaha-based pipeline company, acquired
Houston Natural Gas. The original plan was to maintain the corporate
headquarters in Omaha, but the Houston contingent on the combined board
of directors gradually took control of the company’s affairs and decided to
move the corporate headquarters to Houston. At about this same time, the
combined company adopted the more modern, futuristic name of Enron.
Enron came into being at a challenging time for natural gas pipeline companies.
Historically, the distribution chain delivering natural gas from producers
to consumers had been very heavily regulated. The government set the wellhead
price of natural gas, the price at which producers could sell to pipeline
companies. The rates that pipeline companies charged local utilities and that
local utilities charged retail customers were also set by government agencies
using a cost-plus basis that provided little incentive for innovation. To spur
natural gas exploration in response to the energy crisis of the late 1970s, the
wellhead price of natural gas was deregulated, leading to a rapid increase in
prices paid to producers. However, retail prices were still kept low through
regulation, and pipeline companies had difficulty buying all of the natural gas
they needed to supply their local utility customers. Because of the problems
created by partial deregulation, gas pipeline companies, including Enron, lobbied
various government agencies to deregulate the entire natural gas distribution
chain. As this deregulation evolved, the natural gas market became much
more efficient but also much less predictable. In this new, free-market setting,
the primary risk facing the gas producers and the local utilities arose from the
volatility in energy prices.
Rob Dewey - Personal Name
1st Edtion
13: 978-0-324-59237-
NONE
ACCOUNTING
Accounting
English
South-Western, Cengage Learning
2010
USA
1-1489
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