Editor's Letter

Last month's conviction of Ken Lay and Jeff Skilling on charges relating to the collapse of Enron felt like another important landmark on the road to recovery for energy trading. The 'end of Enron effect' certainly added to the general sense of optimism that was unmissable in Houston last month when the Energy Risk team travelled there for Energy Risk USA 2006. With more than 300 attendees, it was our biggest event since Enron's collapse.

Energy Risk events are, I was told by many conference delegates, viewed as something of a barometer for the health of the energy trading industry, so we were not the only ones delighted with the high attendance. Like everyone at the conference, we also hope it is a good indicator of how well the market is picking up again.

Not only has the worst of the Enron effect now been well and truly absorbed by the market, but the market is arguably stronger as a result. The integration of the Enron diaspora around the market in the months and years after its fall undoubtedly benefited the market as a whole as well.

But recently there has been a new development - the re- emergence of the energy merchant model in smaller, privately-run companies. These discrete centres of Enronian-style genius spread around the market have the potential to take the industry in some very exciting directions. And it's important that they be allowed to do so. When trying to protect against a repeat of the Enron catastrophe it's crucial that the brilliance of Enron is not overshadowed or muddled up with the fraud case. The baby mustn't be thrown out with the bath water.