As more and more companies evaluate their energy procurement practices, many are recognizing the inefficiencies of their decentralized systems. Rather than invest in these non-core activities, companies are choosing to outsource their energy services and reduce their cost structure. These customers recognize the benefits of transferring the risks of their energy prices, plant operations and equipment needs to Enron in exchange for a fixed price contract of up to 10 years.

Enron provides value for customers in five areas: lower commodity and tariff prices, more efficient plant and equipment management, improved facility service, lower-cost capital and integrated energy portfolio management. Delivering full-scale energy outsourcing services requires a broad skill set that few companies possess on a national scale, including logistical systems for gas and electricity commodities, energy services capabilities, capital procurement and deployment and risk management capabilities. Enron possesses all of these skills, and its core competency of pricing and managing risk is especially critical to the execution of its national strategy.

Prior to entering the "private utility" market, Enron anticipated the need for an energy services capability company and acquired a top engineering and design company in California and a national heating, ventilating and air conditioning service contractor that possesses installation, services and facilities management capabilities. Enron continues to develop these businesses and also integrate other service capabilities into its national platform through outsourcing contracts with customers. Enron has energy services capabilities in 24 of the 25 largest cities in the U.S.

Enron's customer contracts illustrate its ability to provide diverse capabilities on a national scope. When Ocean Spray Cranberries, Inc., North America's leading producer of canned and bottled juices and juice drinks, wanted to base its energy prices on unit production, the same measurement used to measure its core business performance, Enron fixed Ocean Spray's energy costs so that as production increases or decreases, energy costs respond accordingly. Under the 10-year contract with Enron, Ocean Spray will lower its energy costs and have greater flexibility to focus on core business activities. As Ocean Spray expands its operations, Enron has the exclusive rights to provide additional energy services.