El Paso Merchant Energy Co. will manage Niagara Mohawk PowerCorp.’s gas supply and storage refill program in a seven-monthasset management agreement announced last week. The agreement,signed April 1, gives El Paso Merchant management responsibilitiesover Niagara Mohawk’s existing term supply, interstatetransportation and underground storage. The total volume of gas tobe supplied over the term of the agreement is 40 Bcf. El PasoMerchant will handle storage for 20 Bcf.

Ultimately, the goal of the contract is to reduce the unit costof gas for Niagara Mohawk’s sales customers. El Paso Merchant willpay the New York-based utility a fixed monthly fee for the right tomanage the assets, and to provide bundled gas supply service forNiagara Mohawk’s existing supply, transportation and undergroundstorage contracts.

Niagara Mohawk, a wholly owned subsidiary of Niagara MohawkHoldings Inc., provides electricity to more than 1.5 millioncustomers across 24,000 square miles of upstate New York. Thecompany also delivers natural gas to more than 530,000 customersover 4,500 square miles of eastern, central and northern New York.

The asset management contract announced yesterday is similar toone El Paso Merchant worked out with Boston Gas in January.

Asset management deals are becoming more common among energyproviders, with both big players and smaller companies setting upmanagement agreements with energy suppliers. In April, Coral Energywon a two-year contract to manage the supply and upstream natural gasassets of KeySpan Energy, (see NGI, April17).

Carolyn Davis, Houston

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