Most of the ink in the wake of the Enron collapse focuses on alleged accounting and stock manipulation violations. Of more importance to energy buyers, however, are congressional and regulatory investigations underway into the utility giant's role in energy trading. Among the questions being raised: Did the large positions Enron held in gas and electricity contracts cause undue market volatility or hardships when it declared bankruptcy, and what is the effect on futures markets? For the short term, there is virtually unanimous agreement among regulators, the energy industry, and large industrial buyers that the market adjusted fairly rapidly with no extra volatility.

Skip Horvath, president of the Natural Gas Supply Association (NGSA), which represents the majority of the nation's large integrated and independent gas producers and marketers, attributes this to "a lot of redundancy in the system, including trading." Contracts left hanging were picked up by some of the 249 other trading companies in the market "rather seamlessly," Horvath says." And I don't see any ramifications for the future."

John Hughes, technical director of the Electricity Consumers Resource Council (ELCON), which represents large industrial buyers of power, says ELCON has not been hearing of any problems from its members. The combination of mild weather and a recession at the time of Enron's collapse disguised any pricing effects as other major traders like Dynergy and Intercontinental stepped in to fill the void, according to Hughes.

Finding answers to the effect of Enron's collapse on futures markets is complicated by other factors affecting power markets, such as weather, the state of the economy, and regional demand and supply pictures. Also unknown is what new regulations or legislation will come out of congressional investigations that may affect gas and power markets. As a result of the Enron fallout, energy industry spokespersons are rushing to defend the benefits of deregulation, including lower prices nationwide compared to the 1970s and 80s. Deregulation critics, however, point to the California shortages and price spikes during and afterward, as potential dangers for the future.

One energy consultant, Robert McCullough, testified before Congress, that the price of energy contracts on the West Coast dropped 30% the day after Enron filed for bankruptcy, suggesting, he says, that the company may have been using its market power to keep prices up.

Another consultant, Bruce Henning of Energy and Environmental Analysis testified that questions still remain about the financial exposures of parties who had longer-term contracts with Enron. Many reduced their exposure as Enron was going down, Henning says, but the status of these contracts is unclear. "It is possible that (these parties) will find themselves back in the market when they thought they had hedged their future stream of production or their future energy needs," he said. Whether they gain or lose, depends on "future energy price movements."

Another factor is whether investments in gas and power production and transmission will keep pace with demand as the economy recovers. According to FERCS Chairman, Pat Wood, Ill., Enron's problems, in combination with the recession and reports of potential overbuilding appear to have eroded investor confidence in the energy industry. The resulting slowdown in building new infrastructure "could be problematic in some regions as the economy recovers and demand for energy grows," Wood warns.

While no one is talking about re-regulating natural gas or stopping the legislation before Congress to advance electricity restructuring, one committee is calling for more exposure of prices in energy futures. The committee is citing Enron's unique position as producer, marketer and trader wrapped into one while conducting trades through E NRON Online, its defunct e-commerce trading platform.

Senator Jeff Bingaman (D-N.M.), chairman of the Senate Energy and Natural Resources Committee, says Enron "was on the other side of every deal" by dealing separately with buyers and sellers through its online trading company, which "provided little or no market transparency." The Senate Energy Bill, S. 1766 under consideration "ensures transparency and real-time reporting of trades," Bingaman says.

Meanwhile, the Federal Energy Regulatory Commission (FERC) has initiated more intense monitoring of energy trading and Wood, whose appointment was backed by Enron, has said FERC will investigate allegations that Enron was manipulating the West Coast market.

Nevertheless, Wood strongly counters suggestions that Enron's collapse "sounds the death knell for competition in energy markets" or justifies re-regulation of electricity. "Enron's failure had little or nothing to do with whether energy commodities and their delivery to customers are monopoly regulated or competitive" but rather was due to questionable investments and accounting practices, he says.