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Enron Mail |
Lindy, FERC has consistently held that pipelines may make "operational" sales
of gas. Specifically this has included occasional sales of gas resulting from cashout requirements and the buying and selling of gas to maintain linepack levels. TW's sale of excess linepack gas would probably be fine. By contrast, buying gas then turning around and reselling it would be suspect as it would look too much like our unbundled merchant function. Let me know if you have further questions. Lindy Donoho 09/20/2000 04:43 PM To: Steven Harris/ET&S/Enron@ENRON, Susan Scott/ET&S/Enron@ENRON cc: Subject: TW Buy/Sell Gas For Operations In our Plan meeting, we were discussing UAF and Operation's objective to reduce it. Operation's objective is a volumetric goal, but we are at risk for the gas price. It started me thinking about our whole fuel expense. TW's fuel expense is valued on our books at the TW systemwide index. Should TW be hedging the fuel that we burn? Jan-Aug, 2000 (acctg months) Y-T-D fuel expense is at $21MM ($2.6MM/month) at a total volume of 6.7 Bcf. This summer, with high gas prices and Gallup in service, our fuel has been ranging $3.4-3.8MM a month. Operations has objectives to minimize the fuel use, but not the price. How could we hedge our fuel used? Would we sell all the fuel retained (hedge it as high as possible) and manage our fuel expense separately through its own purchasing and hedging (as low as possible) effort? Could we have hedged some portion of our fuel usage last year for this year at $2.36 (like we hedged our excess fuel) and not be subject to the high prices we're seeing this summer? Do you think there is an opportunity here to manage our fuel expense more effectively? Susan, I think you had looked at TW's ability to buy/sell gas a few months back (when we were looking at fuel monetization). What did the FERC Order say about under what circumstances TW could buy/sell gas?
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