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Aquila Scores a $264 M Supply Deal

Aquila Scores a $264 M Supply Deal

Utilicorp United's Aquila Energy signed the Nebraska-based American Public Energy Agency (APEA) to a 12-year, $264 million gas supply contract, the company said last week. The deal is retroactive to Dec. 1. Aquila said it is the single largest long-term gas contract to be financed through the issuance of long-term taxable revenue bonds. Under the terms of the contract, the APEA purchased 142 Bcf of supply at a price based on a Northern Natural-Demarc index.

"We remain at the forefront of providing our customers the financial, physical, and risk management capabilities required to prosper economically in today's energy world," says Thomas P. McCarthy, the Aquila vice president who negotiated the contract with APEA. "The ability to execute this taxable prepay transaction is just another example of our proven ability to assist our customers in accomplishing their goals."

Aquila is providing the gas to APEA for sale to APEA's 17 municipal utility organizations and other public agencies across the United States. APEA was created in 1995 by the Nebraska Public Gas Agency and Municipal Energy Agency of Nebraska. Ethan Hirsh, an Aquila spokesman said while this is the largest prepaid contract Aquila is involved in, other Aquila contracts with cogeneration plants are larger overall.

The transaction is the third prepaid contract with a municipality Aquila has signed and the second done with the APEA. In April 1998, Aquila signed a 10-year 14,419,850 MMBtu prepaid deal with Energy America, an affiliate of the APEA. Also, Aquila is in the middle of a 10-year, $125 million contract with the Municipal Gas Authority of Georgia. That contract requires a supply of roughly 20,000 MMBtu/d over the deal's lifetime.

Aquila is not the only company to employ the prepaid contract. Last May, CMS completed a major gas sale to Tennergy Corp., a Jackson, TN-based energy acquisition corporation for 17 municipalities in western Tennessee and Kentucky. The $234 million contract is for 10 years. Under the agreement, Tennergy has pre-paid CMS-MST for 135 Bcf of gas to be delivered from May 1 through April 30, 2009.

John Norris

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