RE: Transwestern Hearing

From: shelley.corman@enron.com

To: jeff.dasovich@enron.com

Subject: RE: Transwestern Hearing

Cc:

Bcc:

Date: Thu, 26 Jul 2001 05:28:00 -0700 (PDT)

Do you have any materials that describe SoCal's current windowing procedure?

r>ho=20
called the matter up for discussion at the Commission's regular meeting.=20
"Thirty-eight cents versus $27, that's a big difference in prices and we=20
ought to be looking at that," responded Commissioner William Massey.=20
"...[W]e believe closer scrutiny of transactions that provide the opportuni=
ty=20
to impose rates many multiples in excess of maximum approved tariff rates i=
s=20
necessary, especially in light of our serious concern regarding the high=20
prices for natural gas in California relative to prices in the rest of the=
=20
country and their consequential effect on wholesale electricity prices in=
=20
California," the order noted [RP97-288-009].=20
FERC's action was in response to a show cause order it issued in March,=20
directing Transwestern to explain how it had firm capacity available on its=
=20
pipeline to move gas under the negotiated-rate transactions, and why its=20
actions in entering into the negotiated-rate agreements didn't violate=20
Commission regulations and policy regarding firm transportation service and=
=20
negotiated-rate agreements.=20
FERC's order requires Transwestern to make certain changes to the posting o=
f=20
daily capacity. "I'm satisfied that this should take care of the issue=20
prospectively," Breathitt said. But with respect to the negotiated=20
agreements, "our order today establishes a hearing of limited scope on a=20
fast-track basis to determine whether Transwestern exercised market power i=
n=20
awarding these...contracts."=20
It directs an administrative law judge to convene a pre-hearing conference=
=20
within 10 days, and issue an initial decision on the matter within 60 days.=
=20
The hearing will focus on three issues: 1) whether Transwestern capacity wa=
s=20
advertised and awarded in a fair manner; 2) whether the rates negotiated we=
re=20
the result of the exercise of market power; and 3) why the capacity awarded=
=20
was available without interruption while recourse service was not available=
.=20
"In addition, I have a question [as to] why shippers agreed to such rates=
=20
when much lower recourse rates should have been available under our=20
negotiated rate program," Breathitt said.=20
The shippers that entered into the negotiated-rate transactions with=20
Transwestern include Richardson Products Co., Sempra Energy Trading Corp., =
BP=20
Energy Co., Astra Power LLC and Reliant Energy Services.=20