Aquila Signs Major Gas Deal with ComEd
Aquila Energy landed a whopper supply deal last week with
Chicago-based ComEd, one of the largest electric utilities in the
country. The contract is for up to 625,000 Dth/d and Aquila said it
is the largest single natural gas contract that has ever been
arranged in the energy industry. Although terms of the one-year
transaction were not released, marketing sources and NGI's pricing
staff confirmed the deal is tied to NGI's Chicago cash index, one
of the most widely used indexes in the industry.
"The players are becoming bigger and bigger, and this is exactly
where it's going. There are a lot of these very large contracts out
there, but there are not a lot of companies that can serve them,"
said Aquila's Mark Gurley, senior vice president and general
"There's probably only one or two other companies in the country
that we think could come close to performing on a contract like
this," he said. Aquila is able to handle a daily delivery of this
magnitude - which could be used to generate enough power to heat or
cool 17,000 homes - "because of the breadth of our physical trading
business with respect to our Gulf Coast, Midcontinent and Canadian
volumes. We'll be relying on everything. This contract is going to
require us to be extremely liquid and very versatile."
On an average day the deal will require 200,000-400,000 Dth/d to
serve ComEd's peaking facilities in the greater Chicago area,
principally as swing gas for the 2,698 MW Collins Generating
Station, the largest gas/oil fueled generating plant in the
"Volumes for volumes sake are not important, but what is
important is liquidity and to some extent moving a lot of volume
gives you physical liquidity allows you to: one, take advantage of
all the arbitrage the market has; and two, to be able to serve
large customers with varying demand more efficiently that someone
else could with smaller volumes."
Gurley said ComEd's demand had been served by multiple "middle
men" suppliers who actually had been relying on Aquila's liquidity.
"All we're really doing is taking the middle man out of the
picture." A ComEd spokesman said Dynegy previously had supplied
most of the gas covered by the Aquila deal.
Aquila is the fourth largest gas marketer based on volume and
the second largest power marketer. It serves more than 15,000
industrial, utility and commercial customers across the US and
Canada, marketing an average of 10.8 Bcf/d and 44 million MWh in
the first quarter of 1999. ComEd provides service to more than 3.4
million customers across Northern Illinois, or 70% of the state's
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