Similar to a deal the two companies made last May involvingthree power plants in the Los Angeles Basin, Williams and AESforged an agreement last week in which Williams will supply thefuel and market the power produced from an AES-built and -operatedpower facility in Pennsylvania. The AES Ironwood plant will belocated in South Lebanon Township and will have a capacity toproduce 700 MW. Financial terms of the transaction were notdisclosed.
“The growing Pennsylvania-New Jersey-Maryland power marketoffers an important opportunity for Williams,” said Jerry Gollnick,president of Williams Energy Marketing and Trading Co.
“We’re implementing a strategy now that we’ve been working onfor quite some time. We targeted the [Pennsylvania-NewJersey-Maryland] market, and this deal represents the beginning ofthe implementation phase,” said Phil Scalzo, a Williams spokesman.”Over the next few months, expect to hear more about Williams’power deals in this market.”
AES will begin construction on the Ironwood facility thisquarter. Service is expected to begin in the second quarter of2001. A Williams spokesperson said the facility will burn 100MMcf/d.
The two companies made a similar agreement in May, but weredealing with already-constructed facilities and much biggervolumes. Through the first deal, Williams gained access to 4,000 MWto market and 250 MMcf/d of gas to supply. In 1998, thesefacilities burned 50 Bcf.
“As a direct result of the California deal, Williams was put onthe map as a power player,” Scalzo said. “Deals in other areasquintupled as a result of this deal.” Williams ranked 14th in NGI’spower marketer rankings for 1998, a position Scalzo said isdirectly attributable to Williams’ dealings with AES.
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