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Enron Mail |
thanks Blair, we've been following the FR debate very closely.
Last week FERC staff recommended to the full commission that the FR contrac= ts be converted to CD contracts, in effect abrogating a huge chunk of the o= riginal 1996 El Paso settlement. The indicated shippers last year did file= a Section 5 complaint against El Paso, accusing the pipeline of over selli= ng its capacity. This debate has been one of the biggest hindrances in get= ting shippers to commit to the Sun Devil project. -----Original Message----- From: =09Lichtenwalter, Blair =20 Sent:=09Thursday, March 21, 2002 2:33 PM To:=09Lokey, Teb; Kilmer III, Robert; Gadd, Eric; Harris, Steven; Hyatt, Ke= vin Subject:=09El Paso Full Requirements Customers You may know this, but I thought I'd pass it on since it was mostly new to = me. El Paso has two types of firm customers, which are CD (contract demand) and= FR (full requirements) customers. FR customers are allowed to schedule an = amount up to their full meter capacity as long as capacity is available. Ho= wever, FR customers pay El Paso a fixed reservation charge and volumes exc= eeding FR quantities are billed El Paso's usage rate. FR customer loads hav= e increased rapidly in the last few years as growth in the states east of C= alifornia has surged. With these increased loads the FR customers have been= getting a tremendous deal since they pay only the usage charge on incremen= tal volumes exceeding their FR quantities. FR customers argue that they are= entitled to this benefit since they bargained for it in EL Paso's last rat= e proceeding. El Paso's last settlement was similar to TW's in that custome= rs agreed to certain benefits in exchange for paying higher rates to resolv= e capacity turnback issues. The FR customer's good deal is a problem becaus= e 1) FR customer's increased volumes have led to capacity prorations making= it more difficult for other shippers to get cheaper San Juan gas, 2) these= prorations in conjunction with the scheduling cycles make it difficult for= shippers to get scheduled, 3) El Paso has no financial incentive to expand= because the FR customers will use the capacity and pay only the usage rate= , and 4) the FR customers ability to take gas has prevented El Paso from of= fering services such as park and loan and storage service that other custom= ers want. Absent FERC action, FR customers will retain the benefits of the = settlement until El Paso's next rate case in 2006. The Commission is threatening to initiate a Section 5 proceeding to address= capacity allocation issues on El Paso and has directed Staff to convene a = technical conference next month to address these issues (see March 18, 2002= Inside FERC). The conference probably won't occur until at least late Apr= il because El Paso is bogged down in their market abuse proceeding.
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