UtiliCorp subsidiary Aquila Energy contracted for the option toprovide gas in exchange for power at one of three combined cyclepower units being built in Batesville, MS, by LSP Energy LimitedPartnership. The unit is expected to go on line by summer of 2000.Under the initial 15-year agreement, Aquila will provide gas to runthe unit, and in exchange LSP will provide Aquila the power andelectrical capacity.

“This unit will provide us with a competitive supply ofelectricity that we can leverage into the rapidly growing southerneconomy,” said V.J. Horgan, senior vice president of powerwholesaling for Aquila. “It will give us a great deal offlexibility in dealing with our customers and will enhance ourposition as a large and innovative player in the marketplace. Theplant will be connected to the Tennessee Valley Authority andEntergy Mississippi. Total capacity of all three units at the siteis 837 MW.

Aquila will have full operational control of the unit and doesnot have to provide gas unless market circumstances make itadvantageous to do so. The initial term of the agreement is 15years, and Aquila has the option to extend it. Horgan said thecompany has recognized the value of controlling generation assetsand is looking to do more deals of a similar nature. “We’d love todo tolling type deals. We’re actually looking at a host of otherdevelopers.” She said the company is particularly interested inNERC regions SERC, ECAR, MAIN, as well as SPP and ERCOT.

The project was developed by LSP Energy Limited Partnership. LSPEnergy, an affiliate of LS Power LLC of East Brunswick, NJ,develops and owns independent power generation facilities in theUnited States.

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