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Enron Mail |
CONFIDENTIAL AND PRIVILEGED ATTORNEY/ATTORNEY AND ATTORNEY/CLIENT
COMMUNICATION My review of files on Dow Waiver has made me recall some important facts in support of the program's legality. First, the 1978 Dow Waiver Program (which involved only wells in the Evetts Field) was instituted, at least in part, because interstate pipelines' takes from split-stream wells in that field were resulting in imbalances. The intrastate producers were concerned that their fair share of the production was being siphoned off by the interstates. Takes to redress that type of situation fall exactly within the meaning of "just and reasonable" discrimination, according to Don Ray (and that makes sense). Second, the 1984 Dow Waiver Program, which began in August 1984, resulted in virtually no discrimination at all, since all other producers were offered the opportunity to participate in Panhandle in March, 1985. The price offered by Panhandle was the lesser of (i) 90% of Panhandle's resale price on the spot market, or (ii) the producer's base contract price. Most producers accepted the Panhandle offer. Dow Waiver and Panhandle producers' gas was taken at rates of 100% of what the wells could produce. Thus, at least as of March 1985, everyone had the opportunity for the same deal -- 100% of volumes taken at the lesser of the base K price or the 90%-of-resale price.. The Dow Waiver volumes were already being taken at the base contract price, which generally was lower than the Panhandle price; Panhandle producers' gas was being taken at the lesser of base K price or Panhandle price. So even leaving aside the issue of the Panhandle volumes having been released from the base Ks, there was no discrimination. The RRC was aware of the terms of the Panhandle "lesser of" price offer and raised no objection. Nor did any producer complain to the RRC that a "lesser of" offer was illegal. Thus, the Dow Waiver Program cannot have resulted in illegal discrimination as to producers who entered the Panhandle Program as of March 1985.
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