In the international energy and power industry,
1996 will likely be known as the "Year of the Merger." With
retail competition a reality in the gas and electricity businesses. big
energy providers strove to grow even bigger and more customer-savvy. Enron
successfully led this movement. Giant gas marketers merged with giant
producers; electric utilities merged with local gas distributors; utilities
and lpps formed far-flung international alliances with utilities and pipelines.
By the year's end, most sizable utilities or energy companies in North
America had either merged or formed a major alliance. The rest were playing
Since Lay assumed chairmanship of Enron, the
company has set a high standard. It has become the marketer of natural
gas and third largest marketer of wholesale electricity in North America,
the largest natural gas transmission system in the Western Hemisphere,
and the second largest such system in the world (Enron Operations Corp.).
Through Enron Development, Enron is one of the largest independent developers
and producers of electricity in the world. Enron also owns 59 percent
of Enron Oil & Gas Company, one of the largest and most successful independent
(non-integrated) exploration and production companies in the United States.
Enron is the largest trader of derivative products
in Europe. Scandinavia, and the U.S., and an Enron unit, the Louisiana
Resources Company Pipeline, which provides access to the Henry Hub, NYMEX's
gas futures trading hub.
Lay has been highly visible in events surrounding
the most innovative merger announced during 1996. In July, Enron announced
a merger with Portland Generral Electric (PGE), the first case of a giant
gas company a regulated electric utility. With the PGE merger, Enron acquires
hard assets (generating assets and transmission capacity) in the competitive
Western U.S. energy corridor. Together, Enron and PGE will operate 5,900
megawatts of electric generation capacity and 37,000 miles of gas pipelines.
Perhaps of greatest strategic value to Enron will be the access to PGE's
fastgrowing retail customer base in Oregon's equivalent to Silicon Valley.
Lay and Enron continue to set some of the highest
future goals in the energy industry. In 1995, Enron announced its vision
of becoming the World's Leading Energy Company creating energy solutions
worldwide for a better environment. After achieving net income in excess
of a half-billion dollars that year, Enron plans to generate net income
in excess of $1 billion in the year 2000, resulting in an average compound
growth rate of approximately 15% over a five-year period.
As Enron continues to expand its business globally,
the responsibilities of corporate citizenship will expand as well. In
recognizing the value of corporate citizenship. Lay may well have anticipated