Peoples, Enron Expand Chicago Partnership into Power Arena
Marking an evolution from a gas supply and storage partnership
forged last year, Peoples Energy Corp. and Enron North America
Corp. (ENA) announced plans last week to move into the Chicago
power generation market. The two companies said the jointly plan to
create a Chicago portfolio of at least 800 MW.
The initial power project that Peoples and Enron will develop
under this agreement is the $100 million Calumet Power LLC. The
partnership will construct, own and operate this peaking power
plant in Chicago, with 245 MW of simple cycle combustion turbines.
The in-service date is set for summer 2001. No other plans for any
other plants are being released at this time, said an Enron North
"This newest initiative expands our relationship with Enron into
power generation and is a major step toward meeting our region's
growing demand for electric power," said Richard Terry, CEO of
Peoples Energy. "Leveraging our regional knowledge and gas
infrastructure with Enron's skills in plant development and power
marketing moves us further toward our goal of deriving 25% of
earnings from diversified businesses by 2002."
Last October, the two companies announced an alliance to pursue
common interests in the Chicago gas market (see NGI, Oct. 11).
Alliance activities include jointly expanding and enhancing
Peoples' existing natural gas hub and providing marketing services
to the Chicago marketplace.
Under a separate agreement, Enron also provides natural gas
supply, for a period of five years, to Peoples Energy's local
distribution utilities, Peoples Gas and North Shore Gas. The deal
locked in two-thirds of Peoples' gas supply over the life of the
contract, which equals 100 Bcf/year.
The deal also marks a major advance in People's generation
portfolio. Luis Diaz-Perez, a spokesman for the company, said the
only generation assets in People's possession in the Chicago area
currently is a 50% ownership in a 600 MW facility in Elwood, IL.
The Enron partnership, combined with a plan to double the output
from the Elwood plant, would improve People's portfolio from
involvement in 600 MW to 2000 MW.
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