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El Paso to Manage Mohawk's Supply, Transportation Storage

El Paso to Manage Mohawk's Supply, Transportation Storage

El Paso Merchant Energy Co. will manage Niagara Mohawk Power Corp.'s gas supply and storage refill program in a seven-month asset management agreement announced last week. The agreement, signed April 1, gives El Paso Merchant management responsibilities over Niagara Mohawk's existing term supply, interstate transportation and underground storage. The total volume of gas to be supplied over the term of the agreement is 40 Bcf. El Paso Merchant will handle storage for 20 Bcf.

Ultimately, the goal of the contract is to reduce the unit cost of gas for Niagara Mohawk's sales customers. El Paso Merchant will pay the New York-based utility a fixed monthly fee for the right to manage the assets, and to provide bundled gas supply service for Niagara Mohawk's existing supply, transportation and underground storage contracts.

Niagara Mohawk, a wholly owned subsidiary of Niagara Mohawk Holdings Inc., provides electricity to more than 1.5 million customers across 24,000 square miles of upstate New York. The company also delivers natural gas to more than 530,000 customers over 4,500 square miles of eastern, central and northern New York.

The asset management contract announced yesterday is similar to one El Paso Merchant worked out with Boston Gas in January.

Asset management deals are becoming more common among energy providers, with both big players and smaller companies setting up management agreements with energy suppliers. In April, Coral Energy won a two-year contract to manage the supply and upstream natural gas assets of KeySpan Energy, (see NGI, April 17).

Carolyn Davis, Houston

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