That change with the deregulation of electrical power markets, a change due in part to lobbying from senior Enron officials. Under the direction of former Chairman Kenneth L. Lay, Enron expanded into an energy broker, trading electricity and other commodities.

Enron became a giant middleman that worked like a hybrid of traditional exchanges. But instead of simply bringing buyers and sellers together, Enron entered the contract with the seller and signed a contract with the buyer, making money on the difference between the selling price and the buying price. Enron kept its books closed, making it the only party that knew both prices.

Over time, Enron began to design increasingly varied and complex contracts. Customers could insure themselves against all sorts of eventualities such as a rise or fall in interest rates, a change in the weather, or a customer’s inability to pay. By the end, the volume of contracts to actually deliver commodit

Jeffrey Skilling, (former Enron Chief Executive Officer) was criticized by Senior Enron executive about possible conflicts of interest in two partnerships he created with former Chief Financial Officer Andrew Fastow. Jeffrey McMahon, then Enron’s treasurer, was highly vexed about the conflicts, “complained mightily” and suggested a list of remedies. Skilling served as the CEO of Enron for six months in 2001 for resigning for personal reasons.

On October 16, Enron announced a $638 million loss for the third quarter, and Wall Street reduced the value of stockholders’ equity by $1.2 billion. Enron announced November 8, that it had overstated earnings over the past four years by $586 million and that it was responsible for up to $3 billion in obligations to various partnerships. A $23 billion merger from rival Dynegy was dropped November 28 after lenders downgraded Enron’s debt to junk bond status.

The bankruptcies of once-prominent national energy companies such as Enron have woken up investors to the reality that today's electric companies are not the safe, near-risk-free investment that the old regulated utilities were. As a result, lenders are charging much highe

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