UtiliCorp United subsidiary Aquila Energy signed an eight-yearcontract to supply gas to a 265 MW independent power project beingbuilt in Rumford, in the paper processing region of western Maine.The contract is valued at $500 million. The plant is one of thefirst merchant facilities being built without a dedicated ratebase, a trend in the gradual deregulation of electricity. The plantis expected to begin operation some time in 2000.

Aquila will supply the plant with up to 46 MMcf/d of gas foreight years. The agreement includes an arrangement whereby Aquilawill take a portion of the project’s gas-to-power price riskthrough a partial subordination of gas payments to senior debt.This agreement will help the plant’s developer and operator, EnergyManagement Inc. (EMI), arrange financing of the entire project,because fuel costs are the major cost of plant operations. Aquilawas recently selected gas supplier to a number of other newgenerating plants, including EMI’s 265 MW Tiverton, RI, project,and LS Power’s 750 MW Batesville, MI, plant.

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