Portland Natural Gas Transmission System files FERC application.

PORTLAND, Maine--(BUSINESS WIRE)--March 14, 1996--The Portland Natural Gas Transmission System (PNGTS) announced today that it has filed with the Federal Energy Regulatory Commission (FERC) for a certificate of public convenience and necessity under Section 7(c) of the Natural Gas Act for the construction and operation of a new 242-mile, 20-inch natural gas pipeline.

The proposed facilities will operate between an interconnection with TransCanada PipeLines at the U.S./Canada border near Jay, Vermont and an interconnection with Tennessee Gas Pipeline in Haverhill, Mass. and will initially transport up to 178 million cubic feet per day (Mmcf/d) of natural gas. In its application, PNGTS requests that FERC make a preliminary determination on non-environmental issues by August 1, 1996 and issue a final certificate by July 1, 1997. The scheduled in-service date is November 1, 1998.

"This application reflects our high degree of confidence that PNGTS will be there to serve the Northeast's growing natural gas needs," stated Dwight G. Curley, chairman of the PNGTS management committee and president of Granite State Gas Transmission, Inc. "The solid interest we have received to-date shows that PNGTS is a well-conceived project. Shippers throughout the region are clearly willing to support a project that offers flexible services and provides access to existing upstream supply basins and transportation facilities," he added.

PNGTS has executed binding precedent agreements with 4 shippers for a total of 167.4 Mmcf/d of firm transportation services over a term of 20 years. These shippers include: Bay State Gas Company; Northern Utilities, Inc. (a Bay State subsidiary); TransCanada Gas Services, Inc.; and CoEnergy Trading Company.

A recent Open Season for capacity resulted in 12 bidders making nominations for an additional 122 Mmcf/d of annual firm service and 145 Mmcf/d of winter firm service. PNGTS expects that these nominated volumes will result in the negotiation of additional binding precedent agreements. If necessary, the expected initial capacity of the pipeline can be expanded to meet market demands.

In its application, PNGTS has proposed cost-based straight fixed-variable (SFV) rates, levelized over a 20-year period and will provide winter and annual firm service. PNGTS has filed for an annualized 100-percent load factor rate of $0.65 per Mmbtu for annual firm transportation and $1.24 per Mmbtu for five-month Winter Firm Transportation service. Overall, the project is expected to cost approximately $251 million (1998 dollars), including construction and development costs. Financing is proposed at 75/25 debt/equity with a requested 14 percent return on equity. -0-

Note to Editors: PNGTS is being sponsored by an international consortium of energy companies as noted below:

Bay State Gas Company (NYSE:BCG), (sponsoring PNGTS through its subsidiary, Granite State Gas Transmission, Inc.) operates in three distinct but related energy business segments -- Local Transportation, Energy Products & Services, and Energy Ventures. As New England's largest independent gas distributor, Bay State's Local Transportation business serves approximately 287,000 customers in Massachusetts, New Hampshire and Maine.

Gaz Metropolitain and Company, Limited Partnership (MSE-TSE:GZM.UN) is the local gas distribution company in Quebec. It serves approximately 150,000 customers in the province, delivering about 200 billion cubic feet of natural gas in 1994. Gaz Metropolitain is the parent company of Northern New England Gas Corporation and its subsidiary, Vermont Gas Systems.

MCN Investment Corporation owns subsidiaries involved in exploration and production, gas marketing, cogeneration, gas storage, gathering and processing; and The Genix Group, a computer operations management firm. MCN Corporation is a $2.9 billion (assets) diversified natural gas holding company with gas markets and investments throughout North America. Its principle subsidiaries are Michigan Consolidated Gas Company (MichCon), a natural gas distribution company serving 1.2 million customers in more than 500 communities throughout Michigan, and MCN Investment Corporation.

Tenneco Energy, a unit of Tenneco (NYSE:TEN), transports one-sixth of the natural gas consumed in the U.S. along its 26-state, 14,768-mile pipeline network. Tennessee Gas Pipeline, Tenneco's largest interstate system, stretches from the Gulf Coast to New England, where it supplies approximately half of the region's natural gas needs.

TransCanada PipeLines is one of North America's leading transporters of natural gas. TransCanada also operates significant complementary businesses in energy marketing, gas-fueled electric power generation, gas liquids extraction, and carbon black manufacturing in North America, and is extending its operation internationally.

U.S. Generating is a partnership between affiliates of PG&E Enterprises, the non-utility subsidiary of Pacific Gas and Electric Company, and Bechtel Enterprises, Inc., the development, financing, and ownership unit of Bechtel Group, Inc. U.S. Generating Company manages over 850 million cubic feet per day of natural gas supplies and transportation, and over 3,600 megawatts of electric generation capacity in the U.S. and Canada.

CONTACT: Media Contact (USA): John Flumerfelt [phone]

Media Contact (Canada): Marc Rochette [phone]