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Enron Mail |
---------------------- Forwarded by Scott Neal/HOU/ECT on 03/07/2001 02:43 PM
--------------------------- Enron North America Corp. From: Rebecca W Cantrell 02/01/2001 05:53 PM To: Scott Neal/HOU/ECT@ECT cc: Subject: Tennessee Purchase of Physical Gas Scott, this is all I could find about Tennessee's right to buy system gas. There was nothing specific to fuel, and of course nothing at all about financial transactions. I don't read it to prohibit them from buying on a forward basis, but they would probably be at risk if prices moved against them too much. Basically, Tennessee can buy or sell gas as required to balance and to maintain system integrity. And they can buy or sell it either (1) on a first come/first served basis at posted prices, (2) through an auction or gas trading system, or (3) through direct negotiations. They no longer have a fuel tracker. Since they are supposed to be retaining fuel from their transportation customers, they shouldn't be buying fuel, per se. The Order 497 regulations deal only with information about transportation, so Tennessee would not be required, absent a tariff provision, to post or report its purchases from affiliates at the time it does them. They do, however, have to file a report of their cashout transactions, including any purchases they make for balancing. If one suspected they had overpaid their affiliate for such gas purchases and it could be substantiated in the filing, the issue could be raised in the cashout report proceeding at FERC. Purchases made for system integrity purposes, if not tied to cashout, would have to be addressed in the next rate case. Fifth Revised Sheet No. 209A Schedule LMS - MA Load Management Service - Market Area (continued) (ii) Operational Transactions: Operational Transactions are those Operational Purchases and Operational Sales which Transporter may from time to time, in its discretion, enter into with third parties to balance Transporter's system and to maintain operational integrity. Pursuant to this Section 7(g)(ii), Transporter may purchase gas quantities for receipt into its system and may sell gas quantities for delivery out of its system. These Operational Transactions may be conducted on a first-come/first-served basis at posted prices, or pursuant to an open auction or electronic gas trading system, or negotiated directly with third parties. The Operational Transactions utilized to reconcile Net Cashout Activity pursuant to Section 7(g)(i) Item No. 2 of this Rate Schedule must occur during the Annual Cashout Period; provided, however, that if the quantity of Operational Purchases or Operational Sales, as applicable, is insufficient to offset the quantity of Net Cashout Activity, then an additional month of Operational Transactions, ending on September 30, thirteen months after the start of the Annual Cashout Period, shall be included in the Cashout Report in order to reconcile Net Cashout Activity. Gas quantities from an Operational Transaction which are used to offset Net Cashout Activity in one Cashout Report cannot be used to offset cashout activity in a subsequent Cashout Report. (iii) Annual Cashout Report: Transporter shall include in the Cashout Reports filed pursuant to this Section 7(g) monthly detail for Item Nos. 1, 4 and 5 as described in Section 7 (g)(i). Such detail shall include a listing of monthly imbalances in dekatherms and dollars by cashout shipper in support of the cashout activity in the report. Transporter will include a list in the Cashout Report of all Operational Purchases and Operational Sales transactions by month during the applicable Annual Cashout Period, plus the additional month provided pursuant to Section 7(g)(ii), if applicable, and will show the derivation of the weighted average price of the Operational Transactions utilized to reconcile Net Cashout Activity for the Annual Cashout Period as described in Item No. 2 in Section 7(g)(i). In addition, Transporter shall include in the Cashout Report detailed support for any required Balancing Entry, Balancing Entry Pricing and Balancing Entry Pricing Adjustment pursuant to Item No. 3 of Section 7(g)(i) of this Rate Schedule.
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