Enron Ascending

Chapter 13Alternative Energies

Environmental policy was Ken’s baby,” remembered Bruce Stram, Enron’s chief economist for many of his 17 years at the company. “Per Ken Lay, Enron was the only natural gas company that clearly understood that environmental regulations, if properly implemented, were good for gas—and acted on it.”

Enron turned natural gas into a clean-energy play. From Lay’s first annual report in 1984 to the annual reports of the mid-1990s, methane energy was the emphasis, reflecting the relatively small scale of petroleum operations at the company. And in terms of vision, “the premier integrated natural gas company in North America” (1987–90) became “the world’s first natural gas major, the most innovative and reliable provider of clean energy worldwide for a better environment” (1990–95).

Enron’s clean-energy differentiation, which included a foray into compressed gas for vehicles, was expanded to solar power in 1995 and to wind power in 1997 at modest cost (several tens of millions of dollars). In first-quarter 1997, these efforts were consolidated as Enron Renewable Energy Corp. (EREC), which nominally became the company’s fifth division despite its meager profits. Sales of both the division’s units—solar to BP in 1999 and wind to GE in 2002—would make for profitable endings despite operational struggles during five years and six years, respectively.

EREC, backed ...