Niagara Mohawk Power Corporation has signed an energy-supply agreement with Tractebel Energy Marketing that will create substantial price protection for the utility’s customers while supporting the further development of competitive electricity markets in New York, US.

Under the agreement, which is subject to approval by the New York State Public Service Commission, Tractebel will manage Niagara Mohawk’s wholesale electricity portfolio through to 2006. The pact would substantially mitigate market-price fluctuations and production risks in existing supply contracts and will help stabilise bills for customers who would otherwise have seen greater price volatility, the companies say.

In essence, Niagara Mohawk will sell to Tractebel at cost virtually all the electricity and derivatives, including contracts tied to the price of natural gas, it currently has under contract with generators and energy marketers. In return, Tractebel will sell to Niagara Mohawk a specified quantity of electricity at a fixed price through 2003. Beginning in 2004, the fixed price would be subject to an annual capped adjustment based on the price of natural gas in the futures markets.

‘This groundbreaking agreement with a proven market leader will provide a high degree of price certainty to our residential and commercial customers,’ said William F Edwards, senior vice president and chief financial officer for Niagara Mohawk.

‘In reaching this deal, we also move closer to our goal of becoming a pure energy delivery company while continuing our exit from the energy generation and supply business.’