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Aquila Supplying Gas to Oklahoma Generator

Aquila Supplying Gas to Oklahoma Generator

UtiliCorp United's Aquila Energy signed a deal to supply gas to the PowerSmith Generation facility near Oklahoma City, OK, The contract, which runs into 2004, is for 50 Bcf. "This is another in a series of long-term contracts that we've completed in the past year where we design unique energy risk migration arrangements given specific independent power plant situations," said Ed Mills, Aquila president.

"The agreement does mix in a number of commercial flexibilities that are popular in this business today," said Dave Freeman, Aquila director of origination. "The business has changed a lot with the advent of the derivatives business, and the financial products inherent in the business today offer a lot of advantages over the older style agreements. In my view, it's a better quality agreement, obviously, than the one they had before."

Aquila has done similar deals all over the country, Freeman said. In the last year Aquila has done four major deals with independent power projects that were long-term, structured transactions.

Aquila is active in Oklahoma and its operations there include gas gathering, processing, and marketing. While Aquila's Tulsa, OK, office markets gas from all of the Midcontinent producing regions, its primary supply source is the Oklahoma fields.

Power generated by PowerSmith's cogeneration facility is sold to Oklahoma Gas &amp Electric, a utility serving customers in Oklahoma and Arkansas. The facility generates about 110 MW, enough power for 110,000 homes.

Joe Fisher, Houston

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