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PG&E Energy Services Contracts With Pepsi Bottler

PG&E Energy Services Contracts With Pepsi Bottler

PG&ampE Energy Services signed a $5 million contract with Pepsi-Cola General Bottlers Inc. to supply gas, energy management, and billing services to all of its Midwest manufacturing and distribution centers.

The multi-year agreement is expected to save Pepsi's bottling facilities more than $250,000 and calls for PG&ampE Energy Services to supply gas to 67 manufacturing and distribution centers in Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Missouri, Ohio, Virginia, West Virginia, and Wisconsin. PG&ampE Energy Services also will provide billing management services, including aggregation and summary of bills for each facility with usage patterns highlighted.

"When a large portion of your operating budget must go to energy-related expenses, it is essential to find a national company with the expertise and resources to fine-tune your efficiency and reduce operating costs," said Gary Kowaleski energy manager for Pepsi-Cola General Bottlers.

"Our agreement with Pepsi-Cola General Bottlers reinforces our presence in Chicago and the Midwest," said Jim Davis PG&ampE Energy Services' senior vice president of integrated services.

Chicago-based Pepsi-Cola General Bottlers is the principal operating company of Whitman Corp. and the nation's largest independently franchised Pepsi bottler not majority-owned by PepsiCo. The company operates in 12 central U.S. states, as well as Poland, Russia, Latvia, Lithuania, and Estonia.

PG&ampE Energy Services has more than $2 billion in long-term contracts. The company has agreements with McDonald's and Carl's Jr. restaurants, Safeway, Vons and Lucky grocery stores, Rite Aid and Sav-on drug stores, Neiman Marcus, ARCO gas stations and convenience stores, Blockbuster video and music stores, IBM, Smucker's, and others. PG&ampE Energy Services said it plans to compete in the Illinois electricity market when it opens to competition next October.

Forms New Alliance Team

The unregulated energy services and trading division of PG&ampE Corp. announced late last week the formation of a new energy alliance team that will focus on marketing, structuring, and managing the company's strategic energy alliances with major industrial customers and utilities. "We believe that creating the energy alliance team and allying the marketing organizations for both power and gas allows us to take full advantage of the synergies across the organizations and to best serve our customers," said Lyn Maddox, CEO of PG&ampE Energy Trading. The team will be led by senior vice president Chris Sauer.

Sauer said the team intends to look for large national, process-intensive industrial partners in businesses like refining, chemicals, petrochemicals, pulp and paper, industrial gas processing, mining and metals. "We're focused on these industries because they typically have many facilities around the country. What we're looking at are customers that have very diverse needs including electricity, gas, steam, potentially capital improvements that reduce energy costs and consumption," said Sauer.

Good examples of the alliances PG&ampE wants to form are its current relationships with ARCO Chemicals, Ultramar Diamond Shamrock and Orange and Rockland Utilities. "There are some really premier industrial companies that have facilities throughout North America that are really very interested in our approach," he said, adding a new alliance should be announced soon, possibly in the next few months.

PG&ampE Earnings Drop on Australian Sale

Despite great performance from its unregulated energy marketing and services arm, particularly its $1.9 billion increase in operating revenues, PG&ampE Corp. said second quarter earnings suffered. Costs associated with electric restructuring and its $120 million sale of Australian assets to Duke Energy caused the set back, said CEO Robert Glynn.

A lower rate of exchange between the Australian and U.S. dollar resulted in a six-cent charge ($23 million loss) taken during the second quarter. The company reported earnings of $174 million (46 cents per share), compared with $193 million (49 cents per share) in 2Q97. Excluding one-time gains and charges in both 1998 and 1997, the operating earnings of the company's unregulated businesses were 4 cents per share in the second quarter, up from 1 cent per share in the second quarter of 1997. In net earnings per share, the unregulated business unit lost 0.02 cents/share, compared to a 0.19 cent/share gain in 2Q97.

Nevertheless, Glynn praised the performance of the company's marketing division. "We are pleased with the strong aggregate performance of our unregulated businesses in the second quarter, particularly in spite of exceptionally weak market fundamentals in transportation of natural gas and natural gas liquids for our PG&ampE Gas Transmission-Texas gas operations," noted Glynn. "I am particularly pleased at the performance of our Houston-based energy commodities trading affiliate, PG&ampE Energy Trading, which managed its operations effectively during recent turbulent electric market activity in the Midwest."

Joe Fisher, Houston; Rocco Canonica

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ISSN © 2577-9877 | ISSN © 1532-1266
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