El Paso to Manage Mohawk's Supply, Transportation Storage
El Paso Merchant Energy Co. will manage Niagara Mohawk Power
Corp.'s gas supply and storage refill program in a seven-month
asset management agreement announced last week. The agreement,
signed April 1, gives El Paso Merchant management responsibilities
over Niagara Mohawk's existing term supply, interstate
transportation and underground storage. The total volume of gas to
be supplied over the term of the agreement is 40 Bcf. El Paso
Merchant will handle storage for 20 Bcf.
Ultimately, the goal of the contract is to reduce the unit cost
of gas for Niagara Mohawk's sales customers. El Paso Merchant will
pay the New York-based utility a fixed monthly fee for the right to
manage the assets, and to provide bundled gas supply service for
Niagara Mohawk's existing supply, transportation and underground
Niagara Mohawk, a wholly owned subsidiary of Niagara Mohawk
Holdings Inc., provides electricity to more than 1.5 million
customers across 24,000 square miles of upstate New York. The
company also delivers natural gas to more than 530,000 customers
over 4,500 square miles of eastern, central and northern New York.
The asset management contract announced yesterday is similar to
one El Paso Merchant worked out with Boston Gas in January.
Asset management deals are becoming more common among energy
providers, with both big players and smaller companies setting up
management agreements with energy suppliers. In April, Coral Energy
won a two-year contract to manage the supply and upstream natural gas
assets of KeySpan Energy, (see NGI, April
Carolyn Davis, Houston
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