Peoples Energy Corp. and Enron North America Corp. (ENA), asubsidiary of Enron Corp., are partnering to target the Chicagoenergy market. Enron and Peoples plan to form a joint entity toexpand and enhance Peoples’ existing gas market hub and providemarketing services to the 1.1 Tcf Chicago marketplace. The newentity will optimize 10 to 20 Bcf/year of Chicago area storagecapacity and related transportation and will provide physical andfinancial product and service offerings, such as balancing,storage, exchange, and title tracking for hub customers.

The Chicago-based entity plans to invest in the area’s gasinfrastructure to augment the flexibility inherent in Peoples’Chicago Hub. “They’re going to be doing things like helping us withcertain gate stations and things that serve our hub, differentparts of the infrastructure that enhance our hub and allow us to domore from there,” said Rodrigo Sierra, a Peoples spokesman.Infrastructure enhancements have not been decided upon, he said,but could include additional storage and pipeline assets. Thealliance is expected to be operational early next year.

“This alliance provides for essential asset optimization and thefurther development of hub services,” said Richard E. Terry, CEO ofPeoples Energy. “Working with Enron allows us to make significantprogress on our long-term strategy of enhancing our utilities andgrowing our diversified energy businesses.”

“By combining Enron’s experience in marketing and riskmanagement with Peoples Energy’s regional expertise, we have aunique opportunity to develop and offer creative wholesale gassolutions to the Chicago marketplace,” said Kenneth L. Lay, EnronCEO.

In addition, Enron will provide gas for Peoples Energyutilities, Peoples Gas and North Shore Gas, for five years as ofOct. 1. Enron will optimize a major share of the utilities’ gastransportation and provide an average of 100 Bcf/year of supply,about two-thirds of the utilities’ requirement. The gas supplycontract uses a market-based index, but more details are not beingdisclosed, Sierra said.

The companies also signed a letter of intent saying Enron willprovide wholesale electricity and risk management services toPeoples Energy Services Corp. (PESC), the retail division ofPeoples that markets power to end-use customers in Illinois. PESCwill be participating in the retail electric market as one of onlysix companies certified to do so in Illinois.

©Copyright 1999 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.