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

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

The City of Glendale, CA, electricity department began receivingits supplies (3,990-MMBtu/d) under the Enron deal, which wasbrokered by APEA, the purchaser of the supplies on a multi-yearbasis using its tax-exempt financing and passing on the savings tothe munis. APEA was formed in 1995 to help public utilities buy andmanage energy supplies. Earlier, supplies began flowing May 1 topublic 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 wascompleted in mid-April by APEA.

Enron Natural Gas Marketing delivers the supplies to APEA, whichin turn re-delivers it to the government-run power utilities. Theutilities have four-year deals with three future potentialrollovers, or a total of 12 years overall. This is the fifth gassupply deal that APEA, based in Lincoln, NE, has brokered formunicipal utilities. They did three deals last year and an initialone in 1997, according to Roger Mock, APEA President/CEO. Enron wasthe supplier in two of those earlier deals; Aquila in the othertwo.

“We can go out to a large utility and do a competitive bid ifthey want to sign up for a length of time for a large amount of gasor if they want to form a consortium of utilities, or we can workthrough a supplier with existing customers,” Mock said. “We’re justout to help the public agencies buy better-priced gas.We providea service to public entities around the country and the NebraskaPublic Gas Agency picks up a little gas in these transactions.(APEA works through NPGA’s network to public energy operatorsaround the nation.) It seems like it is good for the whole publicsector.”

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