Duke Contract Approval Request

I've discussed the "actual fuel" provision with Christine and Bob and made
them aware that this is a nonconforming provision that would need to be
filed, since the FTS-1 rate schedule provides that fuel payments are to be
made according to the percentages set forth in the rate sheets.

According to Bob's calculations, the actual fuel used by Duke under this
contract is likely to exceed the applicable percentages in our tariff.

I don't think FERC or any of our shippers would have any immediate objection
to our charging actual fuel. However, I know that fuel is a sensitive issue
on TW so I wanted to be sure to draw your attention to this provision. Let
me know what you think.

---------------------- Forwarded by Susan Scott/ET&S/Enron on 09/12/2000
02:02 PM ---------------------------

Christine Stokes
09/12/2000 02:00 PM
To: Bob Burleson/ET&S/Enron@ENRON, Steven Harris/ET&S/Enron@ENRON, Mary Kay
Miller/ET&S/Enron@ENRON, Mary Darveaux/ET&S/Enron@ENRON, Glen
Hass/ET&S/Enron@ENRON, Drew Fossum/ET&S/Enron@ENRON
cc: Susan Scott/ET&S/Enron@ENRON, Kevin Hyatt/ET&S/Enron@Enron

Subject: Duke Contract Approval Request

TRANSWESTERN PIPELINE COMPANY
CONTRACT APPROVAL FORM

Please review the attached non-standard discount letter to Duke Energy
Trading & Marketing (DUKE) and the associated letter from Transwestern to
Duke which outlines the conditions of Transwestern's Contribution in Aid of
Construction (CIAC) payment to Duke for certain facility upgrades.

Transwestern shall pay Duke $750,000 for Duke facility upgrades in order to
increase gas receipts into Transwestern from Duke's Artesia plant and Big
Eddy gathering system by an incremental 20,000 Dth/d. Duke shall
subsequently subscribe to a five year transportation contract for 20,000
Dth/d of East of Thoreau (EOT) capacity at a $.05/Dth/d one-part rate
effective November 1, 2000. Duke shall be charged ACTUAL fuel, currently
calculated as 1.5% (compared to EOT Tariff fuel rate of 1.31%), for any
transportation within Transwestern's EOT Area. Duke has also been granted
the ability to flow to California on an alternate basis at a total rate of
$.09/Dth/d plus applicable Tariff fuel (currently 5%).

Please indicate approval via REPLY WITH HISTORY. Please contact me at x5702
if any questions arise.