Koch Gateway has a provision in the Negotiated Rates section of its tariff
that allows Koch to charge a lump-sum option fee. Neither the tariff nor the
FERC order approving the provision describes the option fee in much detail.
The Commission did require Koch to separately state any option fee
arrangements when making its negotiated rate filings for deals that include
option fees. The Commission also stressed that an option fee annot guarantee
capacity and therefore does not amount to a request for transportation
service.

Koch has made three negotiated rate filings involving option fees. In the
first such filing, Koch explained that the proposed negotiated rates were
comprised of two parts: an option fee and an index-based usage rates.
Because Koch did not specify the index price formula, the Commission required
Koch to provide this information. The Commission also required Koch to
report the time frame during which the negotiated rate customers could
exercise their options, so that other shippers could determine whether they
were similarly situated.