Vectren Source, affiliate of Indiana Gas and Southern Indiana Gas & Electric, signed an agreement last week to buy bankrupt NewPower Company’s Ohio natural gas customers within the Columbia Gas of Ohio and Dominion East Ohio Gas territories. Meanwhile, the Vectren’s utility affiliates filed with the Public Utilities Commission of Ohio (PUCO) to allow their residential and small business customers in west central Ohio to begin purchasing their natural gas from alternative suppliers beginning Dec. 1.

Under the terms of the NewPower agreement, Vectren Source will pay $25 for each customer contract, subject to an adjustment based primarily on natural gas price movements. The estimated purchase price of the 175,000 customer contracts is $4.3 million. In addition, Vectren Source said it will pay $12.5 million for natural gas inventory. Vectren Source said that ProLiance Energy LLC, a joint venture between Vectren and Citizens Gas & Coke Utility, will provide commodity and risk management services.

NewPower said the transaction will be subject to bankruptcy court and regulatory approvals. The company said it filed the Vectren Source asset purchase agreement on Friday for the review and approval of the bankruptcy court under the proposed sales and bidding procedures. The court approval process includes a time period in which other entities may submit higher and better offers.

On June 11, NewPower filed a voluntary petition for Chapter 11 reorganization in the U. S. Bankruptcy Court for the Northern District of Georgia. The company has already found new suppliers for its Texas and Georgia customers. In early June, NewPower said it would transition all of its Texas power customers in the TXU service area to Reliant Energy Retail Services LLC, and its customers in the Reliant service area to TXU Energy Retail Company LP (see NGI, June 17). Southern Company said it would acquire NewPower’s Georgia natural gas customers, the rights to use its risk management system and the company’s Georgia natural gas inventory and accounts receivable for $60 million.

Upon completion of the Vectren Source transaction, NewPower said it expects the cash collateral posted with the local utility Columbia Gas of Ohio, Inc. which ensured NewPower’s fulfillment of obligations in that market, to be released.

In gaining NewPower’s Ohio gas customers, Vectren Source — which was formed in 2001 — said the scale added by this transaction better positions it to participate in the planned Vectren Energy Delivery of Ohio customer choice program in Dayton and western Ohio later this year.

The Evansville, IN-based utility company said the decision to start a natural gas choice program came after months of collaboration with interested parties. Vectren said it will launch a public education campaign in late summer and gas marketers may solicit customers around Oct. 1. Like other choice programs around the country, a residential or small business customer may either remain with Vectren or select an alternative gas supplier. The company will continue to provide distribution, meter reading and pipeline maintenance services so Dayton-area customers continue to receive reliable natural gas at their homes and facilities.

Vectren’s energy delivery subsidiaries, Indiana Gas Co., and Southern Indiana Gas and Electric Co. (SIGECO), provide gas and/or electricity to nearly one million customers in adjoining service territories that cover nearly two-thirds of Indiana and west central Ohio.

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