UtiliCorp United’s Aquila Energy signed a deal to supply gas tothe PowerSmith Generation facility near Oklahoma City, OK, Thecontract, which runs into 2004, is for 50 Bcf. “This is another ina series of long-term contracts that we’ve completed in the pastyear where we design unique energy risk migration arrangementsgiven specific independent power plant situations,” said Ed Mills,Aquila president.

“The agreement does mix in a number of commercial flexibilitiesthat are popular in this business today,” said Dave Freeman, Aquiladirector of origination. “The business has changed a lot with theadvent of the derivatives business, and the financial productsinherent in the business today offer a lot of advantages over theolder style agreements. In my view, it’s a better qualityagreement, obviously, than the one they had before.”

Aquila has done similar deals all over the country, Freemansaid. In the last year Aquila has done four major deals withindependent power projects that were long-term, structuredtransactions.

Aquila is active in Oklahoma and its operations there includegas gathering, processing, and marketing. While Aquila’s Tulsa, OK,office markets gas from all of the Midcontinent producing regions,its primary supply source is the Oklahoma fields.

Power generated by PowerSmith’s cogeneration facility is sold toOklahoma Gas &amp Electric, a utility serving customers in Oklahomaand Arkansas. The facility generates about 110 MW, enough power for110,000 homes.

Joe Fisher, Houston

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