Southeast US municipal utilities form gas purchasing group

Philadelphia (Platts)--4May2004

A group of Southeast US municipal electric and gas utilities Tuesday signed a
letter of intent to form a new entity, Public Gas Partners (PGP), to help them
secure a significant portion of the gas they will need for their power plants
and to serve retail gas customers. A spokesman for the Florida Municipal Power
Agency (FMPA), a 29-muni group that led efforts to establish PGP, said the
partnership is designed to help "capture economies of scale, provide
additional negotiating leverage, and reduce risk" for its muni partners. FMPA
and its members depend on gas-fired generation for a large part of their
electric needs, he said. PGP plans to acquire producing gas reserves and other
long-term gas supplies as a hedge against volatility in future gas prices.
Initially, it expects to develop a supply portfolio capable of producing
80,000 MMBtu/day.

Day-to-day operations of PGP will be performed under contract by the Municipal
Gas Authority of Georgia, which like FMPA is a founding member of the
partnership. Other entities that have joined the group include munis in
Lakeland and Tallahassee, Florida, the Lower Alabama Gas District, the
Municipal Gas Authority of Mississippi, the Public Energy Authority of
Kentucky, Patriots Energy Group, the Southeast Alabama Gas District, Florida
Gas Utility, and Tennessee Energy Acquisition Corp.

This story was first published in Platts real-time news and market reporting
service Platts Electricity Alert (http://electricityalert.platts.com ).

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