Illinova Energy Partners (IEP) purchased another niche retailmarketing operation last week to bolster its presence in keyderegulating markets. The company, which has added EMC GasTransmission in Michigan and Equitable Resource Marketing inIndiana during the last six months, purchased Tempe, AZ-basedQuality Energy Services (QES) to gain a foothold in thesoon-to-be-deregulated Arizona energy market.

QES is a retail gas marketing company with about 30 largecommercial and industrial gas customers primarily in Phoenix andTuscon. The company handles about 20% of the gas transportationmarket on Southwest Gas’ system, said QES President WendellJohnson. He said IES brings solid financial support to an energyretail marketing operation that is likely to experience significantgrowth over the next few years with the potential opening of theelectric market. The restructuring of Arizona’s electric industrywas delayed in January but is expected to gain momentum later thisyear.

“With Quality Energy Services as part of our family, we canimmediately provide businesses in Arizona with a natural gassupply,” said Laurie Q. McTavish, vice president of IEP. “We canalso provide energy information management products and energyefficiency services-services that magnify the savings realized fromgas transportation. And finally, when deregulation hits Arizona,we’ll be able to provide electricity as well.”

Through acquisitions such as QES, IEP has increased natural gasrevenues more than three-fold since mid-1998, the company said. IEPis now serving eight times more customers than at the beginning of1998. In conjunction with other planned acquisitions throughout theU.S. in 1999, IEP could see natural gas revenues grow to $90million, an increase of $11 million from 1998. By the end of 1999,IEP said it should be serving about 5,000 industrial and largecommercial facilities.

Illinova Energy Partners is a subsidiary of Illinova Corp., andan affiliate of Illinois Power. Illinova also splits ownership withMontana Power in Tenaska Marketing, a wholesale energy marketingcompany.

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