Nov. 29, 2001
Don?t Be Fooled: Dynegy Still Wins, Consumers Lose With “Collapse” of Dynegy/Enron Merger
Dynegy Seeks Control of Enron?s Pipelines, Guaranteeing Monopolistic Control
WASHINGTON, D.C. ? Public Citizen warned today that unless government regulators block Dynegy?s acquisition of Enron?s Northern Natural Gas Co., millions of consumers will be vulnerable to noncompetitive pricing in electricity and natural gas. The acquisition would make Dynegy America?s newest and largest vertically integrated energy company.
Although Dynegy?s acquisition of Enron was called off, Dynegy still is trying to acquire Enron?s most lucrative asset. Comprising two-thirds of Enron?s 25,000 thousand miles of domestic natural gas pipelines, the Northern Natural Gas line runs from fields in Texas? Permian Basin to 14 states throughout the Midwest, Southwest and West.
According to news reports, Dynegy used $1.5 billion from its part owner, ChevronTexaco, to provide liquidity to Enron after the merger was announced. Now, Dynegy says it plans to claim 100 percent of the equity in Northern Natural Gas, which was used as collateral for the transaction. BusinessWeek recently estimated the pipeline is worth $2.25 billion.
Although the pipeline subsidiary is saddled with debt and recent flat profits, the 16,500 miles of Northern?s pipeline will connect ChevronTexaco?s domestic natural gas production (ChevronTexaco controlled 15 percent of the nation?s natural gas production in 2000) and Dynegy?s electricity generation and power marketing capacity, providing unlimited profiteering opportunities.
“The Dynegy/Enron merger has not collapsed, because Dynegy has gotten the only thing it wanted all along: Enron?s natural gas pipelines,” said Tyson Slocum, research director for Public Citizen?s Critical Mass Energy & Environment Program. “Now ChevronTexaco can connect the dots between its nearly three billion cubic feet of daily domestic natural gas production and Dynegy?s 23,500 megawatts of electricity generation, since two-thirds of its electricity is generated by natural gas. This synergy of collusion will create America?s largest vertically integrated energy company, enabling Dynegy to charge its customers higher prices for natural gas and electricity, and force its power generation competitors to pay monopolistic prices for natural gas.”