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Enron Mail |
Jeff -- since most of Teddy's comments were over my head yesterday, I could
use your help on that part of the discussion. *** Transwestern held its Transport Options Workshop on August 31. Commercial and regulatory representatives of BP-Amoco, Burlington, Conoco, Coral, Dynegy, Phillips and Reliant attended. After a brief overview of the proposed TW Options filing, we opened the floor for questions and comments. Here is a summary of the comments. Marketing affiliate concerns. BP's regulatory representative expressed concern that TW's marketing affiliates would be able to use options to game the system. For example, since TW and ENA are both Enron companies, if ENA buys a call option it is essentially a free option. ENA could buy a call out of the money and we could buy it back from them, with the proceeds going to Enron's bottom line. BP suggested that TW's marketing affiliates be banned from purchasing options, or that the marketing affiliate be required to credit the call money to other shippers. BP's concern is that TW's filing will set a precedent for other pipelines to offer a similar service, so they want TW's options program to be as restricted as possible. Dynegy reiterated its suggestion that the marketing affiliate be required to credit back the difference between the option fee paid by the affiliate and the next highest bidder's bid, if the affiliate's bid exceeds the next highest bid by a certain percentage. Our response was that while actual abuse of an options program by a marketing affiliate would be a concern, we feel that TW is entitled to a presumption that it has complied and will continue to comply with the rules on sale of capacity to marketing affiliates. At this point we are not inclined to voluntarily include any limitations on the options program. If BP and others have issues regarding Commission marketing affiliate policy in general, those issues should be addressed in a different proceeding that pertain to all interstate pipelines. Right of first refusal. Burlington asked whether options would replace the right of first refusal. Our response was that ROFR will still be available pursuant to the terms and conditions of our tariff. Negotiated rate. BP's representative claimed that options will constitute a negotiated rate and that each deal will need to be filed as such. We did not respond to this or discuss it further. However, TW's position at this point is that since the option fee is part of the transportation rate, the deals will only be negotiated rate deals if the total rate exceeds the maximum rate. Hoarding capacity. Several customers expressed concern that the options program would make it easier for a shipper to hoard capacity. It was not clear why they thought that options would create more opportunity for hoarding than already exists. Their perception was that options would simply make hoarding cheaper and easier. We acknowledged that the potential for withholding capacity from the market is one reason for FERC's current policy against reserving capacity for shippers. Although we did not commit to placing any limits on the quantity of capacity for which a shipper may purchase an option, it is possible that FERC may require us to do so. Our plan is to meet with PG&E and SoCalGas in California to elicit their comments, and finalize the FERC filing by mid-September.
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