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 WASHINGTON, Nov. 1 /PRNewswire/ -- Subsidiaries of Potomac Electric Power Company (NYSE: POM) (PEPCO) of Washington, D.C., and The Columbia Gas System, Inc. (NYSE: CG) of Wilmington, Del., have formed a joint venture partnership to own and operate natural gas storage and terminaling facilities at Cove Point, Md., and a natural gas pipeline that extends from Cove Point to Loudoun, Va.
 These facilities are currently owned by Columbia LNG Corporation, the Columbia Gas subsidiary.
 The new partnership will seek approval this week from the Federal Energy Regulatory Commission to provide natural gas peak shaving services to local gas distribution companies and other natural gas users beginning with the winter heating season of 1995-96. With the recent restructuring of the natural gas industry under FERC Order 636, this price-competitive service will provide supply security and operating flexibility to local distribution companies to meet their public service obligations to consumers.
 One of PEPCO's principal strategic interests in the Cove Point project is to secure a reliable and cost-effective source of transportation for gas to fuel the generators at its Chalk Point Generating Station. The Cove Point pipeline is the sole means of delivering natural gas to southern Maryland where Chalk Point is located. PEPCO is currently expanding Chalk Point's fuel flexibility to use larger supplies of gas to comply with the Clean Air Act and to reduce customer costs.
 "This partnership should help hold down the cost of providing electric service and ensure service reliability," said Edward F. Mitchell, chairman of the board and chief executive officer of PEPCO. "It is a timely opportunity that should provide benefits for our customers and our shareholders."
 Under the transaction, Columbia LNG Corp. will contribute its Cove Point terminal and pipeline assets in exchange for an equity interest in the partnership and PEPCO's subsidiary will invest up to $25 million in the form of equity and debt. The investment by PEPCO's subsidiary will be used by the partnership to recommission certain existing facilities at the terminal and construct a new liquefaction unit that will be used in the peaking service. The transaction is subject to Columbia's receipt of regulatory and other approvals.
 The Cove Point terminal, which was constructed in the mid-1970s, is designed for the importation of liquefied natural gas by ship and the redelivery of up to one billion cubic feet of natural gas per day.
 "Columbia Gas looks forward to building a new alliance between the electric and natural gas industries to help meet the needs of both industries' customers, as well as the goals set by the Clean Air Act," said John H. Croom, chairman and CEO of Columbia Gas.
 PEPCO provides electricity to about 2 million people in Washington and suburban Maryland. The company is also the wholesale provider of electricity to the Southern Maryland Electric Cooperative.
 The Columbia Gas System, Inc., is one of the nation's largest natural gas systems. Subsidiary companies are engaged in the exploration, production, purchase, storage, transmission and distribution of natural gas and other energy operations such as cogeneration. The Columbia Gas System, Inc. has been operating as a debtor in possession under Chapter 11 of the Federal Bankruptcy Code since July 31, 1991.
 -0- 11/1/93
 /CONTACT: Nancy Moses, 202-872-2680, or Steve Arabia, 202-872-2680, of PEPCO, or Bill McLaughlin, 302-429-5443, or Bill Chaddock, 302-429-5261/

CO: Potomac Electric Power Company; The Columbia Gas System, Inc. ST: District of Columbia, Delaware, Maryland, Virginia IN: OIL SU: JVN

MK -- PH028 -- 9240 11/01/93 14:45 EST
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Publication:PR Newswire
Date:Nov 1, 1993

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