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Allegheny Energy ends tolling agreement

August 02, 2003|by JULIE E. GREENE

julieg@herald-mail.com

In continued efforts to scale back the energy trading side of the business, Allegheny Energy Inc.'s energy trading subsidiary announced Friday an agreement was reached to end a 1,000-megawatt tolling agreement.

Allegheny will pay $128 million to Williams Energy Marketing & Trading Co., a unit of Williams, to end the tolling agreement, according to an Allegheny news release.

Williams Energy served as a broker between Allegheny and the owner of power plants Allegheny had the right to use to provide power to California, if necessary, Allegheny Energy Supply spokeswoman Janice Lantz said.

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Allegheny didn't use those plants often because the price was too high, Lantz said. To use energy from those plants Allegheny had to buy natural gas to run the plants.

Allegheny officials announced Monday they had reached an agreement to sell the company's long-term energy supply contract with the California Department of Water Resources to a division of The Goldman Sachs Group for $405 million.

Allegheny's first payment of $100 million to Williams will be made after the Goldman Sachs deal is completed, which is expected to occur by the end of the year, Allegheny officials said.

The termination agreement with Williams is subject to approval of a majority of Allegheny's bank lenders, the company news release states.

Allegheny also has a 15-year tolling agreement with Las Vegas Cogeneration II that company officials will try to end, according to Lantz and a company statement.

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