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New York Poised to Close Last Coal-fire Power Plant

LCG, December 4, 2019--The last operating coal-fired power plant in New York is moving toward closure shortly. Last month, Somerset Operating Company, a subsidiary of Riesling Power LLC, submitted a request to the New York State Public Service Commission (NYSPSC) to waive the state's required, 180-day notice to close the Somerset Station, allowing the facility to be retired on February 15, 2020. Closure is contingent on approvals by both NYSPSC and the New York Independent System Operator (NYISO), which will evaluate if it will cause an adverse effect on grid reliability.

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Construction Commences on Enel’s Aurora Wind Farm in North Dakota

Enel Green Power North America, Inc. (“EGPNA”), the US renewable energy company of the Enel Group, has started construction of the 299-MW Aurora Wind Farm in North Dakota.

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Industry News

Enron Admits Padding Profits by $591 Million

LCG, Nov. 9, 2001--Enron Corp. admitted yesterday that it had padded its reported profits by $591 billion over the past four and three-quarters years and said its earnings reports would have to be restated.

"Financial statements for and the audit reports relating to the year-end financial statements for 1997 through 2000 should not be relied upon," the company said. The first three quarters of 2001 were also off the mark.

Should not be relied upon? It is more difficult to produce financial statement which should not be relied upon than it is to simply post the numbers fair and square. Moreover, a lot of people have to sign off on those financial statements -- the company's financial executives, its chief executive and its independent auditors.

Enron's chief executive, Jeff Skilling, resigned in August, saying he needed a change in lifestyle. In October, the company sacked its chief financial officer, Andrew Fastow. Both Skilling and Fastow had made a lot of money, over and above their regular compensation.

As to the padded profits, Enron says it should have reported 1997 earnings as $9 million, and not $105 million. Earnings for 1998 should have been reported as $590 million, and not $703 million. In 1999, the company earned $643 million and not $893 million. Last year, earnings should have been reported as $847 million and not $979 million. So far this year, Enron has reported earnings of $211 million, but has actually earned $216 million, the company now says.

Enron told the Securities and Exchange Commission, which is investigating the company's dealings with partnerships controlled by Fastow, that the confusion stemmed from accounting for profits earned in transactions with those partnerships. By way of explanation, Enron offered this less than edifying bit of foggy English:

"Many of these transactions involve 'special purpose entities,' or 'SPEs.' Accounting guidelines allow for the non-consolidation of SPEs from the sponsoring company's financial statements in certain circumstances. Accordingly, certain transactions between the sponsoring company and the SPE may result in gain or loss and/or cash flow being recognized by the sponsor, commonly referred to by financial institutions as 'monetizations.'"

During the period Enron overstated its profits, its shares enjoyed a spectacular run-up on the New York Stock Exchange. Skilling is said to have made an extra $84.5 million between 1996 and 2000, before he became chief executive. Fastow, according to people close to the company but not part of it, earned more than $100 million from transactions between Enron and the partnerships he controlled.

The bloodletting at Enron is not over. Yesterday, the company said it was terminating the employment of Ben Glisan, managing director and treasurer of Enron Corp., and Kristina Mordaunt, a managing director and counsel of an Enron division. The company said it believes that these two employees, along with four other former Enron employees, were involved as partners in one of Fastow's partnerships that had dealings with Enron.

In recent years, support for Enron in the investment community has been an article of faith -- sort of like belief in Tinker Bell or the tooth fairy. The Internet version of Forbes Magazine, had this comment:

"During the fat years, Enron's books were known for being as complex as a Thomas Pynchon novel. Even those who actually read them had trouble understanding. But everyone--whether or not they deciphered what was going on--seemed confident they were in the presence of genius and felt good about themselves, too."

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