El Paso Merchant Energy Co. made a three-year asset managementagreement with Boston Gas Co., a subsidiary of Eastern Enterpriseseffective Nov. 1, 1999. El Paso will provide gas supply managementto Boston Gas and affiliated LDCs Colonial Gas Co. and Essex GasCo. Service includes arranging gas supply, managing interstatetransportation, and optimizing underground storage. Massachusetts’Department of Telecommunications and Energy approved the deal Oct.18.

El Paso Merchant Energy will supply bundled citygate servicedesigned to realize the competitive value of the combined LDCs’supply, transportation, and underground storage assets with theultimate goal of reducing the unit cost of gas for the LDCs’ salescustomers. El Paso Merchant Energy will pay Boston Gas a fixedmonthly fee for the right to optimize the assets.

“Through this agreement we intended to lower the overall cost ofgas for all our customers by taking full advantage of off-systemrevenue opportunities during the peak heating season,” said ChetMesser, CEO Boston Gas. “Previously, we had placed portions of ourupstream portfolio under third-party management, resulting in greatbenefits for our firm customers. In that this may be the lastheating season prior to full-scale unbundling in Massachusetts, wethought it prudent to put our entire upstream portfolio out formanagement. This not only optimized our gas portfolio for thebenefit of our firm customers but ensured that our operatingprotocols and systems are compatible with full-scale assetmanagement.”

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