By John K
In 1985 Huston Natural Gas merged with InterNorth, a natural gas company and decided to come up with a new company name ENRON. It profited by promising to deliver so many cubic feet to a particular utility or business on a particular day at a market price.
That change with the deregulation of electrical power markets, a change due in part to lobbying from senior Enron officials. Under the direction of former Chairman Kenneth L. Lay, Enron expanded into an energy broker, trading electricity and other commodities.
The Business of Enron
Enron was originally involved in the transmission and distribution of electricity and gas throughout the United States, and the development, construction, and operation of power plants, pipelines and other infrastructure worldwide. The corporation had a variety of products that it offered such as petrochemicals, plastics, power, pulp and steel. Enron also had a variety of service lines such as Energy and Commodities Services, Broadband Services, Capital and Risk Management Services, Energy Transportation and Upstream Services, and Commercial and Industrial Outsourcing Services. Enron became a giant middleman that worked like a hybrid of traditional exchanges. But instead of simply bringing buyers and sellers together, Enron entered the contract with the seller and signed a contract with the buyer, making money on the difference between the selling price and the buying price. Enron kept its books closed, making it the only party that knew both prices. Over time, Enron began to design increasingly varied and complex contracts. Customers could insure themselves against all sorts of eventualities such as a rise or fall in interest rates, a change in the weather, or a customer's inability to pay.
Government regulation is one way that society shows it cares about responsible conduct in business. In the early 1990s the Congress of the United States of America passed legislation... [continues]
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