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Enron Inks Supply Deals with Four Munis

Enron Inks Supply Deals with Four Munis

Enron Corp. and the American Public Energy Agency (APEA), a Nebraska-based tax-exempt financing conduit for public power entities, have struck a unique $295 million deal to supply about 32 MMcf/d over four years to four municipal electric utilities in California and Washington.

Enron Natural Gas Marketing Corp. is looking for other similar supply arrangements with municipal utilities, according to a spokesperson. Terms were not disclosed, but based on earlier deals, the price is expected to be several cents below indexed rates at given receipt points throughout the Western U.S. A spokesperson for the Sacramento Municipal Utility District indicated its deal with APEA, calls for gas at five cents/Mcf below the price at any of five hubs from which SMUD can choose.

The City of Glendale, CA, electricity department began receiving its supplies (3,990-MMBtu/d) under the Enron deal, which was brokered by APEA, the purchaser of the supplies on a multi-year basis using its tax-exempt financing and passing on the savings to the munis. APEA was formed in 1995 to help public utilities buy and manage energy supplies. Earlier, supplies began flowing May 1 to public utilities in Pasadena (3,000-MMBtu/d) and Sacramento (15,000-MMBtu/d), and to the Clark County Public Utility District (10,000-MMBtu/d) in Vancouver, WA. The $295 million bond issue was completed in mid-April by APEA.

Enron Natural Gas Marketing delivers the supplies to APEA, which in turn re-delivers it to the government-run power utilities. The utilities have four-year deals with three future potential rollovers, or a total of 12 years overall. This is the fifth gas supply deal that APEA, based in Lincoln, NE, has brokered for municipal utilities. They did three deals last year and an initial one in 1997, according to Roger Mock, APEA President/CEO. Enron was the supplier in two of those earlier deals; Aquila in the other two.

"We can go out to a large utility and do a competitive bid if they want to sign up for a length of time for a large amount of gas or if they want to form a consortium of utilities, or we can work through a supplier with existing customers," Mock said. "We're just out to help the public agencies buy better-priced gas. We provide a service to public entities around the country and the Nebraska Public Gas Agency picks up a little gas in these transactions. (APEA works through NPGA's network to public energy operators around the nation.) It seems like it is good for the whole public sector."

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