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Enron Mail |
Assuming we keep Arthur Anderson on board this afternoon and assuming Enron
is still in the business of doing asset monetizations like this one (which better be the case since its in the TW 4th Q plan @$2.5 mm), the following things need to happen on roughly the following timetable: 1. Mike talks to Hanover and we negotiate the price, specific contract language, etc. (hopefully within 2-3 weeks of turning Mike loose?) 2. Regulatory (assisted by Maria and me) flanges up the FERC abandonment filing and tees it up to file the minute Mike finalizes the deal with Hanover. We haven't talked about this for a while, but the story we tell FERC has to acknowledge that the monthly O&M cost will be higher under our outsourcing deal than it currently is, if load factor and other operating assumptions remain constant. That may be the key to our story line--we argue that outsourcing is necessary to creating flexibility in our cost structure to protect us and our ratepayors from market changes, gas flow changes, and capacity turnbacks. The Compression Services Agreement, as it is currently drafted, has a two part demand-commodity rate. Thus, if our throuput goes to pot on the segments where these outsourced compressors are, or if we have big capacity turnbacks, the outsource deal allows us to shed costs quickly. Charlie's preliminary cost spreadsheets seem to me to support this strategy. I'll talk to Maria and MKM's team about this. Also, we need to be able to explain to explain that our deal is not all that new or radical. It is just a tiny bit different from the many deals FERC has seen where compression or other services are outsourced from the get-go with new facilities. For example, FERC allowed NNG to outsource compressor motor operation and ownership using ECS (and, by tomorrow, hopefully will allow TW to do the same at Gallup). Florida has a similar deal, as well as intrastates like HPL. Maria and I and MKM's folks need to turn over every rock to find examples of similary outsourcing that don't involve Enron. We need to let FERC know that the outsourcing train has already left the station and we just want to jump on board. 3. We get the abandonment order in the 4th Q and do the deal. (Will we have the chance to do some more schmoozing and lobbying of FERC folks before we file--i.e., at a prefiling conference???) See how easy these deals are when you use assumptions to eliminate the many problems!
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