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TransCanada Inks Its Largest Asset Management Deal

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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