Williams, Kinder Morgan sign 3,300 MW tolling agreement


By the OGJ Online Staff

HOUSTON, Feb. 20, 2001—In a second big generation program reported Tuesday, a unit of Tulsa-based Williams said it signed a 16-year tolling agreement to supply fuel to and market 3,300 MW of capacity for six intermediate-peaking power plants to be developed by a subsidiary of Kinder Morgan Inc., Houston.

Financial terms of the agreement were not disclosed. Earlier, Southern Co. reported plans to expand generating capacity by 6,600 MW by 2004 in the Southeast, including 4,600 MW to serve the competitive wholesale markets.

Each of the six Kinder Morgan combined cycle natural gas-fired facilities will produce 550 MW of capacity and will be located in the Midcontinent and Southeast regions. The first of the planned six facilities is currently under construction in Jackson, Mich., and is expected to be online during the second quarter of 2002.

Construction of two additional facilities is planned for completion by the second quarter of 2003 and the final three by the second quarter of 2004.

The tolling transaction represents one of the largest marketing agreements for new plant construction executed in the U.S. to date, said Steve Malcolm, CEO of Williams Energy Services. He said the 3,300 MW capacity addition is consistent with Williams's plan to expand its national portfolio to 40,000 MW by 2005.

The six plants will use a combined cycle design that includes both aero-derivative and industrial gas turbines with fast response during peak demand, the companies said.

"This agreement will enable us to rapidly accelerate our power development program, while retaining our strategy of focusing on fee-based or tolling projects," said Richard D. Kinder, Kinder Morgan CEO. He said fee-based earnings from these new plants are expected to drive significant growth in the company's power segment in 2002 and beyond.

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