§ Mr. Sayeed
To ask the Secretary of State for Trade and Industry what assessment she has made of the implications of the problems faced by Enron for the UK electricity market, with particular reference to(a) volatility, (b) liquidity and (c) pricing; and if she will make a statement. 265W
§ Mr. Wilson
It is important to recognise that Enron's current situation was not caused by any problems in the UK electricity market, but by the collapse of its US parent company. The wholesale electricity market coped well with the circumstances surrounding Enron's administration. The new electricity trading arrangements have provisions within them to deal with companies going into administration. It is difficult to identify the precise impact of any one event within the wholesale markets. There were however no significant increases in the level or volatility of prices over the past four weeks. Liquidity, particularly on the power exchanges, did however increase as market participants sought to offset any potential counterparty risk exposure.