Williams and AES Corp. re-lit the flame of their cozyrelationship yesterday. Williams signed a 20-year agreement withAES to supply gas and market 832 MW of generating capacity andassociated energy and ancillary services from AES’ planned Red Oakpower facility in Sayreville, NJ. Financial terms of the agreementwere not disclosed.

Red Oak will generate power to be sold to the Pennsylvania-NewJersey- Maryland (PJM) markets. Construction on the gas-fired,combined cycle plant began earlier this month and operations arescheduled to begin in the first quarter of 2002.

It is the third deal between the two companies. In May 1998,they signed a similar agreement under which Williams provides fuelto and markets 4,000 MW of capacity and associated energy andancillary services from three of AES’ southern Californiagenerating stations. And in February 1999, Williams reached anagreement to supply fuel to and market 700 MW of capacity andassociate energy and ancillary services from AES’ Ironwood facilityin South Lebanon, PA, which is currently under construction.

AES Red Oak completed a $384 million non-recourse project bondfinancing yesterday for the construction of the New Jerseyfacility. AES’ total investment in the plant will be $440 million,which includes an equity contribution of $56 million. RaytheonEngineers & Constructors, Inc. began construction earlier thismonth.

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