Richard Green, CEO of Aquila Inc., last week told an audience of investment professionals that the company’s disposition of its trade book has “virtually been completed.” The company in August of last year vowed to exit the wholesale energy marketing and trading business operated by its Aquila Merchant Services subsidiary (see NGI, Aug. 12, 2002).

Green, appearing at the 38th annual Edison Electric Institute Financial Conference in Florida, noted that Aquila at one point had one of the larger trade books in North America, but is now down to holding about 12 contracts.

“Given the deterioration of the wholesale energy market, those contracts really can’t be sold,” Green said. The contracts will “roll off over the next few years. They are profitable positions, so we don’t see any complications with that.” The duration of the remaining contracts is three to five years, Green said.

Moody’s earlier this year cut the debt ratings of Aquila citing, among other things, liquidity pressures weighing on the energy trading business that Aquila has been unwinding.

Meanwhile, Green brought investors up to date on the company’s ongoing efforts to sell its portfolio of 13 IPPs, as well as a heat rate swap. “We did get final bids on Sept. 24. We are right now negotiating with a short list of bidders. We anticipate announcing something on that transaction still this year, with closing estimated to be in the first part of third quarter of ’04.”

As for other non-core assets held by Aquila, Green noted the company’s ownership of three peakers, which are not up for sale. The company has an approximately $500 million investment in the peakers. The annual O&M cash requirement to keep those peakers “up and ready to fire, when the market would give us the economics, is only $10 million, so we think it’s prudent right now to keep those peakers for a period of time.”

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