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Peoples, Enron Expand Chicago Partnership into Power Arena

Peoples, Enron Expand Chicago Partnership into Power Arena

Marking an evolution from a gas supply and storage partnership forged last year, Peoples Energy Corp. and Enron North America Corp. (ENA) announced plans last week to move into the Chicago power generation market. The two companies said the jointly plan to create a Chicago portfolio of at least 800 MW.

The initial power project that Peoples and Enron will develop under this agreement is the $100 million Calumet Power LLC. The partnership will construct, own and operate this peaking power plant in Chicago, with 245 MW of simple cycle combustion turbines. The in-service date is set for summer 2001. No other plans for any other plants are being released at this time, said an Enron North America spokesman.

"This newest initiative expands our relationship with Enron into power generation and is a major step toward meeting our region's growing demand for electric power," said Richard Terry, CEO of Peoples Energy. "Leveraging our regional knowledge and gas infrastructure with Enron's skills in plant development and power marketing moves us further toward our goal of deriving 25% of earnings from diversified businesses by 2002."

Last October, the two companies announced an alliance to pursue common interests in the Chicago gas market (see NGI, Oct. 11). Alliance activities include jointly expanding and enhancing Peoples' existing natural gas hub and providing marketing services to the Chicago marketplace.

Under a separate agreement, Enron also provides natural gas supply, for a period of five years, to Peoples Energy's local distribution utilities, Peoples Gas and North Shore Gas. The deal locked in two-thirds of Peoples' gas supply over the life of the contract, which equals 100 Bcf/year.

The deal also marks a major advance in People's generation portfolio. Luis Diaz-Perez, a spokesman for the company, said the only generation assets in People's possession in the Chicago area currently is a 50% ownership in a 600 MW facility in Elwood, IL. The Enron partnership, combined with a plan to double the output from the Elwood plant, would improve People's portfolio from involvement in 600 MW to 2000 MW.

John Norris

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