PG&E Corp. announced yesterday that its gas marketingsubsidiary, PG&E Energy Trading – Gas Corp. (PG&E Energy)has signed Roanoke Gas Co. and its affiliate, Bluefield Gas Co., toyear-long gas management contracts. Financial terms of thecontracts were not disclosed. The deals are expected to begin Nov.1.

Combined, West Virginia-based Bluefield and Virginia-basedRoanoke serve over 55,000 natural gas customers and have over 2.7Bcf of storage capacity. The contract covers about 8.7 Bcf. In1998, Roanoke and its affiliate spent over $33 million on gaspurchases. Roanoke holds pipeline transportation and storagecapacity on Columbia Gas and Columbia Gulf and Tennessee GasPipeline, and operates its own liquefied natural gas storagefacility. In addition PG&E Energy will manage the twocompanies’ transportation and storage assets.

Art Pendleton, COO of Roanoke and Bluefield Gas. said, “Westrongly believe that this partnership with PG&E Energy Tradingwill result in lower gas costs that will directly benefit ourcustomers and ensure that natural gas remains the energy resourceof choice in the markets we serve.

“It all comes down to capacity release,” Pendeleton continued.”We didn’t feel, as a small gas company that we were doing a goodjob. By signing on with a major marketer, we think we can save ourcustomers somewhere around $750,000 in capacity release costs.” Hestressed the savings total was an estimate.

The announcement is good news for PG&E Corp., which justlast week reported disappointing earnings. For the 3Q99, the SanFrancisco-based company had $6.3 billion in revenue, or 50cents/share, versus $5.3 billion, or 55 cents/share in the sameperiod of 1998. One of the main scapegoats was its gas tradingsector (see Daily GPI, Oct. 18). Its Energy Services sector,however, improved in the third quarter, registering a loss of threecents/share as compared to a four cent/share loss in 3Q98.

The deal is also the first major gas management contractannounced since Thomas Boren, a former top executive at SouthernCo., was hired to head PG&E National Energy Group (see DailyGPI, Aug. 2), the holding company for PG&E’s Gas Transmission,Power Trading and Energy Services divisions.

Boren’s division is a major factor in PG&E’s overallbusiness strategy, the parent company said. Robert Glynn, CEO ofthe company called it the “primary engine for our future earningsgrowth.”

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