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PG&E Sells Energy Services Contracts to Chevron Unit

PG&E Sells Energy Services Contracts to Chevron Unit

PG&E Energy Services all but completed its exit from the unregulated energy commodity and related services businesses with the announcement last week it has sold its remaining service contracts and related assets to a unit of Chevron Corp. The contracts cover commercial, industrial and institutional customers spread around the country. The two San Francisco-based companies would not disclose terms of the deal, but said it is expected to close in mid-July.

Earlier this spring PG&E sold the commodity contracts it had for supplying electricity and natural gas to various large, multi-site customers to Enron's retail energy services unit for $85 million. That sale is supposed to close by the end of this month. In total, PG&E Energy Services over the past three years had locked up deals for the commodity and related services that exceeded several billion dollars in long-term value.

Prior to a decision late last year to get out of the energy services business to concentrate on power plant development, trading and interstate natural gas pipeline operations in the Pacific Northwest --- PG&E Energy Services signed deals with Marriott, Motel 6, the Los Angeles Unified School District and the nation's largest commercial property manager. The deals collectively exceeded $300 million in value.

Thursday's sale marks Chevron's entry into the energy services business, and while a spokesperson said the company won't speculate about future acquisitions, the head of the company's products business talked bullishly about the new line of business, calling it "vibrant and growing."

"This purchase will help position Chevron to provide total energy solutions for its commercial and industrial customers," said Patricia Woertz, president of Chevron Products Co. "This acquisition will accelerate our entry into the value-added services segment of the energy market."

With this deal PG&E Energy Services has only a "handful of contracts" and mostly small hardware/software infrastructure left to sell, said a PG&E Corp. spokesperson, noting that Enron and Chevron got the vast bulk of the energy services assets.

Richard Nemec, Los Angeles

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