Re: Gas Sales on TW?

Thanks, Maria, this is very helpful. I'm planning on drafting something this
week for everyone's review. Don't know if any other pipelines have tried to
do anything similar but I'll find out.

Maria Pavlou
03/06/2000 04:39 PM
To: Drew Fossum/ET&S/Enron@ENRON
cc: Susan Scott/ET&S/Enron@ENRON

Subject: Re: Gas Sales on TW?

FYI a little more background:

The Amgas relationship began as a result of TW's efforts to unbundle under
Order No. 636, whereby we assigned gas purchase contracts to Amgas. In
addition, we had them administer certain remaining gas purchase contracts as
well as our de minimus sales function. All Amgas does today is administer
our sales function. We never eliminated our sales function; we just
transferred the administration of it to Amgas.

The marketing affiliate rule requires that a pipeline's sales division be
treated as a functional equivalent of a marketing affiliate. Our standards
of conduct provide that the Vice President of Finance and Accounting is
advised of pertinent sales activities by Amgas but does not participate in
any of the day-to-day operations of Transwestern's merchant function. As a
result, the VP is not a shared operating employee under Standard G. FTS-2
transportation service is the unbundled no-notice transportation service the
(former and current) sales customers received under Order No. 636. I think
we should be able to file revised standards saying that the merchant function
is even smaller than it was when we unbundled [true?] which is not enough
work for an agent to perform and that we've brought it back in house and
explain why the person with the sales function responsibility is not a shared
operating employee under G. Maria

From: Drew Fossum 03/06/2000 11:02 AM

To: Susan Scott/ET&S/Enron@ENRON, Maria Pavlou/ET&S/Enron@ENRON
cc:

Subject: Re: Gas Sales on TW?

This sounds like a good candidate for a waiver application to FERC. If we
can save the $60,000/yr, it would be worth asking FERC for authority to
simply use an ET&S market services person to administer the farm tap sales
from time to time, without any functional separation or other junk. We could
even list the specific sales contracts we have so FERC would be comfortable
that we are not going to expand the business. The NN situation was different
(I think) because NN had formally notified FERC that it was discontinuing use
of its sales rate schedule. Would TW use the FTS-2 rate schedule? We have
never formally discontinued the TW sales function, right? What do you guys
think about the likelihood that FERC would approve such a waiver? Has it
ever approved similar small-volume waivers? DF

From: Susan Scott 03/02/2000 04:32 PM

To: Drew Fossum@ENRON, Mary Kay Miller/ET&S/Enron@ENRON, Dari Dornan@Enron
cc:

Subject: Gas Sales on TW?

I've been asked to look into whether TW may administer its farm tap sales
contracts directly or whether we need to continue to use AmGas. TW no longer
has any gas purchase contracts, just a handful of sales contracts to persons
who granted rights of way to TW. Many of these parties don't even buy gas on
a regular basis, but they still have the contractual right to do so. We pay
AmGas around $60,000/year to administer the contracts. The AmGas contract is
terminable on 30 days notice.

I know that last year NNG re-established its pipeline sales division to make
occasional gas sales and for other economic reasons (i.e. the base gas
deal). Do you think it would be worthwhile for TW to do the same? Looks
like NNG had an easy time getting its filing approved, but would like to hear
from you what all was involved behind the scenes -- in other words, was it as
easy as it looked?

Another idea that Maria suggested would be to apply to the Commission to
waive the Section 284.286 requirements in this instance since the remaining
sales contracts are so few and insignificant.

Your comments would be most appreciated!