Utilicorp United’s Aquila Energy signed the Nebraska-basedAmerican Public Energy Agency (APEA) to a 12-year, $264 million gassupply contract, the company said last week. The deal isretroactive to Dec. 1. Aquila said it is the single largestlong-term gas contract to be financed through the issuance oflong-term taxable revenue bonds. Under the terms of the contract,the APEA purchased 142 Bcf of supply at a price based on a NorthernNatural-Demarc index.
“We remain at the forefront of providing our customers thefinancial, physical, and risk management capabilities required toprosper economically in today’s energy world,” says Thomas P.McCarthy, the Aquila vice president who negotiated the contractwith APEA. “The ability to execute this taxable prepay transactionis just another example of our proven ability to assist ourcustomers in accomplishing their goals.”
Aquila is providing the gas to APEA for sale to APEA’s 17municipal utility organizations and other public agencies acrossthe United States. APEA was created in 1995 by the Nebraska PublicGas Agency and Municipal Energy Agency of Nebraska. Ethan Hirsh,an Aquila spokesman said while this is the largest prepaid contractAquila is involved in, other Aquila contracts with cogenerationplants are larger overall.
The transaction is the third prepaid contract with amunicipality Aquila has signed and the second done with the APEA.In April 1998, Aquila signed a 10-year 14,419,850 MMBtu prepaiddeal with Energy America, an affiliate of the APEA. Also, Aquila isin the middle of a 10-year, $125 million contract with theMunicipal Gas Authority of Georgia. That contract requires a supplyof roughly 20,000 MMBtu/d over the deal’s lifetime.
Aquila is not the only company to employ the prepaid contract.Last May, CMS completed a major gas sale to Tennergy Corp., aJackson, TN-based energy acquisition corporation for 17municipalities in western Tennessee and Kentucky. The $234 millioncontract is for 10 years. Under the agreement, Tennergy haspre-paid CMS-MST for 135 Bcf of gas to be delivered from May 1through April 30, 2009.
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