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

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

“This newest initiative expands our relationship with Enron intopower generation and is a major step toward meeting our region’sgrowing demand for electric power,” said Richard Terry, CEO ofPeoples Energy. “Leveraging our regional knowledge and gasinfrastructure with Enron’s skills in plant development and powermarketing moves us further toward our goal of deriving 25% ofearnings from diversified businesses by 2002.”

Last October, the two companies announced an alliance to pursuecommon interests in the Chicago gas market (see NGI, Oct. 11).Alliance activities include jointly expanding and enhancingPeoples’ existing natural gas hub and providing marketing servicesto the Chicago marketplace.

Under a separate agreement, Enron also provides natural gassupply, for a period of five years, to Peoples Energy’s localdistribution utilities, Peoples Gas and North Shore Gas. The deallocked in two-thirds of Peoples’ gas supply over the life of thecontract, which equals 100 Bcf/year.

The deal also marks a major advance in People’s generationportfolio. Luis Diaz-Perez, a spokesman for the company, said theonly generation assets in People’s possession in the Chicago areacurrently is a 50% ownership in a 600 MW facility in Elwood, IL.The Enron partnership, combined with a plan to double the outputfrom the Elwood plant, would improve People’s portfolio frominvolvement in 600 MW to 2000 MW.

John Norris

©Copyright 2000 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.