Enron Energy Services

From Wikipedia, the free encyclopedia

Enron Energy Services (EES) was a business unit of Enron Corporation, whose purpose was to provide gas, electricity, and energy management directly to businesses and homes. Enron compared the service to choosing a telecommunications company to provide your house with a phone line. Consumers would be able to call and order all of their energy from Enron in one bill.

[edit] The business plan

Some information in this article or section is not attributed to sources and may not be reliable.
Please check for inaccuracies, and modify and cite sources as needed.

EES's best known area of business was California. Part of their strategy was to use two-way wireless electric meters, which could be read remotely and eventually turn air-conditioning and lighting systems on and off by telephone[1]. Enron bought thousands of these meters as well as millions of dollars worth of wireless air time. Enron Energy Services promised business and home users average annual savings from 5% to 15%.

EES spent millions of dollars on advertising to attract customers. This business strategy depended on a large, deregulated market, and it became clear in the late 1990s that states were not deregulating fast enough. Few meters made it out of the warehouse and Enron employees received Skytel pagers because the company already bought the massive amount of airtime. Enron decided to change its strategy and target businesses, organizations, and corporations with offices distributed around the United States.

[edit] Problems

Enron Energy Services had problems billing customers and getting the bills to them in the correct amount. It was alleged that they paid customers to sign contracts, to prove to Wall street that energy trading actually was happening. It was also alleged that the company manipulated the California electricity market to increase profits[2].

After spending on ads and marketing with little return, the company’s operations were in a deficit of over 500 million dollars. Enron Energy Services was one of the many business units that filed for bankruptcy with Enron Corporation on December 2, 2001.