PG&E Corp. won a contract Tuesday to supply more than $2 billion in natural gas and electricity to Ultramar Diamond Shamrock Corp. over seven years, locking up a big customer as the U.S. electricity market opens to competition over the next few years.
PG&E, acting as sort of a personal energy shopper, will find the lowest prices for the energy needed to run Ultramar’s refining and chemical plants in the U.S. and Canada. PG&E also will build a plant to provide power to a refinery near San Antonio and find ways to cut Ultramar’s energy consumption.
San Francisco-based PG&E beat rivals Enron Corp., NGC Corp., Duke Energy Corp., Southern Co. and Coral Energy Resources LP, a joint venture of Shell Oil Co. and Tejas Gas Corp., for the contract.
“This deal is creative. It’s the kind of thing competitive companies do,” said Robin Diedrich, from Edward Jones & Co.
Ultramar Diamond said it expects the PG&E agreement to cut energy costs at many of its facilities by 15 to 25 percent by lowering its costs for power and fuel and cutting its energy consumption. PG&E will get 30 percent of the value of any savings it provides Ultramar.
“PG&E is such a huge company, they can go out and purchase things like natural gas for a lot cheaper than we can, and pass that savings on to us,” said Anne Keever Cannon, Ultramar spokeswoman.
PG&E will also evaluate electricity usage at 2,400 Ultramar convenience stores and gas stations and find ways to cut power consumption, the companies said.
