TransCanada Inks Its Largest Asset Management Deal
Last week's agreement by Semco Energy Gas Co. to a three-year
deal with TransCanada PipeLines Ltd. for management of its gas
supply gives TransCanada its largest asset management relationship
to date. Semco also will buy the majority of its gas supplies from
TransCanada for the three years of the agreement, which is
effective April 1, 1999.
Semco, a regulated gas distributor, has more than 240,000
customers in the Upper and Lower Peninsulas of Michigan. The
agreement calls for TransCanada to manage 157.5 MMcf/d of gas
transportation on five U.S. pipelines on behalf of Semco. The
pipelines are ANR, Panhandle Eastern, Northern Natural, Great Lakes
Gas Transmission, and Jackson Pipeline. TransCanada also will
manage 16 Bcf of storage for the utility.
"This agreement will have positive results for SEMCO ENERGY
customers and shareholders with lower prices for our product and
the opportunity to increase earnings in the future by being on the
competitive edge," said William L. Johnson, CEO Semco.
A strategic alliance with an asset manager is another move by
Semco to position itself for the competitive market that will exist
after gas industry deregulation is completed, said Jon A. Kosht,
vice president for rates and regulatory affairs. The company in
September said it will reduce and freeze its gas cost recovery
factor for three years beginning with the April 1999 billing cycle.
The GCR factor is the purchased gas cost component of the rates
charged by the company to its customers.
TransCanada has similar asset management arrangements with 21
other customers, five of them in Canada and the rest in the United
States, most in the Midwest.
Joe Fisher, Houston
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