The collapse of Enron Corp., so far a political, legal and investor crisis, is now imposing widespread costs on the U.S. economy, according to a range of companies, energy experts and bankers.
Electricity and natural gas companies are facing higher costs. Projects to build power plants, pipelines and transmission lines are being put on hold. And in all sections of the economy, companies with high debts are feeling the pinch of tighter credit.
More than $12 billion of investment in new power plants has been postponed in recent weeks as financial markets, unnerved by Enron's sudden descent into bankruptcy, have effectively raised the cost of capital for energy projects. Plans to develop natural gas deposits also are being cut back dramatically.
Ultimately, if these cutbacks result in power shortages and higher costs in future years, the burden will fall on consumers, according to energy experts.
To be sure, the recession and mild winter weather are reducing demand for energy. But Enron's demise is playing a role, experts say, as lenders and credit rating firms are taking a hard look at corporate debt levels and forcing many to cut back spending plans and sell assets to improve their balance sheets.
That reaction in financial markets may have been unforeseen by the Bush administration.
Lawrence B. Lindsey, the president's chief economic advisor, and his staff studied Enron in the months before its Dec. 2 bankruptcy filing to gauge the potential effects of its collapse on markets for natural gas and for stocks, bonds and currencies.
"Lindsey found the impact on other markets was a nonevent," Ari Fleischer, White House press secretary, said Wednesday. (Before joining the Bush administration, Lindsey was a paid consultant to Enron.)
Some businesspeople have a different view. "Enron is affecting the whole U.S. economy, particularly the energy industry," said analyst Christopher Ellinghaus of Williams Capital Co., a New York investment firm. "At a time when the U.S. needs to improve its energy infrastructure with transmission lines and power plants, the Enron case has changed the credit market's whole view of debt and put off projects," Ellinghaus said.
The very decline of Enron stock from more than $90 a share to 50 cents a share in a single year has taken a massive $67 billion of shareholder wealth out of the economy. Many employees and former employees at Enron face meager retirements.
