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Aquila Swapping Gas, Power in MS

Aquila Swapping Gas, Power in MS

UtiliCorp subsidiary Aquila Energy contracted for the option to provide gas in exchange for power at one of three combined cycle power units being built in Batesville, MS, by LSP Energy Limited Partnership. The unit is expected to go on line by summer of 2000. Under the initial 15-year agreement, Aquila will provide gas to run the unit, and in exchange LSP will provide Aquila the power and electrical capacity.

"This unit will provide us with a competitive supply of electricity that we can leverage into the rapidly growing southern economy," said V.J. Horgan, senior vice president of power wholesaling for Aquila. "It will give us a great deal of flexibility in dealing with our customers and will enhance our position as a large and innovative player in the marketplace. The plant will be connected to the Tennessee Valley Authority and Entergy Mississippi. Total capacity of all three units at the site is 837 MW.

Aquila will have full operational control of the unit and does not have to provide gas unless market circumstances make it advantageous to do so. The initial term of the agreement is 15 years, and Aquila has the option to extend it. Horgan said the company has recognized the value of controlling generation assets and is looking to do more deals of a similar nature. "We'd love to do tolling type deals. We're actually looking at a host of other developers." She said the company is particularly interested in NERC regions SERC, ECAR, MAIN, as well as SPP and ERCOT.

The project was developed by LSP Energy Limited Partnership. LSP Energy, an affiliate of LS Power LLC of East Brunswick, NJ, develops and owns independent power generation facilities in the United States.

Joe Fisher, Houston

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