Contractual Innovation in the UK Energy Markets

Synopsis
In December 1996, Enron Europe and The Eastern Group were on the verge of signing an innovative transaction in the utility industry. Eastern was going to buy a long-term option to convert natural gas into electricity from Enron, thereby giving it the economic right to operate a "virtual" power station. This structure was vastly different from the traditional independent power plant (IPP) structure, and the executives involved had to convince their superiors of its wisdom before they could proceed. This case was jointly written for Large-Scale Investment and Corporate Financial Engineering, and it covers topics related to both project finance and financial engineering. It illustrates a new paradigm in the electric power industry: the creation of virtual power stations backed by physical power stations with merchant exposure. It also illustrates how physical operations (constructing and operating a power plant) can be used to offset contractual obligations and trading exposures.
- Copyright:
- 2000 HBS
Book Details
- Book Quality:
- ISBN-13:
- Publisher:
- Harvard Business Publishing
- Date of Addition:
- 2016-08-03T01:42:43Z
- Language:
- English
- Categories:
- Business and Finance, Nonfiction,
- Usage Restrictions:
- This is a copyrighted book.
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