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Were Enron's Answers Blowing in the Wind?

Enron of Houston, Texas, did not generate electricity; it became the world’s seventh largest revenue generating corporation by acting as a middleman, merely trading the juice that has become the lifeblood of modern society, squeezing out profit from other people’s electricity-generating assets.

One of the few energy-related assets Enron maintained was its wind turbine-manufacturing subsidiary, Enron Wind Corp (EWC). Even though wind power has been the fastest-growing power supply source over the past decade, Enron had been trying to sell its wind unit for more than a year. Enron seemed oblivious to the true value of America’s last major wind company. Or perhaps it just viewed a company whose revenues grew from $50 million annually in 1997 to $750 million in 2001 as a source of cash to shore up its shaky financial footing.

Enron got lost in a virtual world of on-line trades and Internet connections, and forgot about fostering real innovations in supplying electricity from actual hardware that can offer lasting solutions. To its credit, Enron supported curbing emissions to global climate change. Yet the firm failed to recognize that the value of one of the few energy-related hard assets it owned -- Enron Wind Corp. -- showed tremendous profit potential due to global climate change concerns.

“We are one of the top three wind turbine manufacturers in each of the top three world wind power markets: the US, Germany and Spain,” Adam Umanoff, CEO and president of Enron Wind Corp. told me. Among those interested in Enron Wind Corp, which is not part of the bankruptcy proceeding that has engulfed its ailing corporate parent, is UBS Warburg of Great Britain. If snatched up by a European firm, the billions of US dollars in private and public sector capital invested into wind technology will have failed to sustain even one major domestic wind turbine manufacturer!

Whether Enron Wind Corp. remains in the hands of a US company or is sold to a foreign interest is a more a matter of pride and principle, than something that would have a direct impact on consumers. Of course, this could become another example of how US taxpayer investments in a new technology creates a winner in the marketplace, only to have long-term jobs and other economic benefits stemming from this new technology then exported to other countries.

Of greater consequence to consumers across the country is how the fall of Enron affects federal deregulation legislation, particularly the rules governing transmission investments. These rules will determine whether wind power, a technology that Enron helped become a commercial technology, can deliver on the promise of a better world.

The fall of Enron is also casting a long shadow on current debates over further deregulation of the $200 billion US power industry. Umanoff of Enron Wind Corp. extols the virtues of deregulation, noting, of course, that competition in states such as Texas and Pennsylvania have helped open up new opportunities for wind and other renewable resources.

“California did not get it right, but that is no reason to abandon deregulation. Both Texas and Pennsylvania protect consumers from the wild price uncertainty that hit here. The devil is always in the details,” Umanoff said. “For the first time in history, wind power can compete without subsidy with the least cost fossil fuel alternatives. This cost parity is the main driver behind today’s great global expansion of wind power.”

In 2001, the world saw $6.5 billion invested in new wind power facilities.

Lawmakers in February will commence hearings on federal deregulation bills, which were in trouble before Enron’s nosedive. As the Federal Energy Regulatory Commission (FERC) has jurisdiction over these transmission issues, the wind power industry knows the next few months of testimony and decisions are critical. Traffic on the nation’s interstate transmission system increased by more than 200% last year, according to the Edison Electric Institute. Clearly, policymakers have for too long neglected to retool the nation’s transmission highways.

America has the best wind resources in the world. These resources just happen to be located in rural regions such as the Dakotas, Montana and the rest of the Great Plains, where transmission lines are few and far between. Anyone concerned about global warming needs to recognize that opening up the transmission grid to new players willing to bet on wind power is one of they key solutions to our long-term energy supply.

Although just a footnote in the unfolding drama surrounding Enron, both the future of wind power in the US and the tedious details of transmission policy loom as critical components of our energy future and efforts to bring our antiquated power system into the 21st century.


Peter Asmus is author of Reaping The Wind: How Mechanical Wizards, Visionaries and Profiteers Helped Shape Our Energy Future, and Reinventing Electric Utilities: Competition, Citizen Action and Clean Power, both published by Island Press.

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