Southwest Gas - Next Steps

Leslie --

Please let me know what you need to get this issue properly defined by EES. One option, maybe, would be to take the customers back to sales service. Would there be any problems with this? Please let me know.

Jim

-----Original Message-----
From: Lawner, Leslie
Sent: Wednesday, September 12, 2001 10:57 AM
To: Kingerski, Harry; Steffes, James D.
Subject: FW: Southwest Gas

FYI. Apparently we turned back sales customers in Arizona served by Southwest Gas but we are still on the hook for their gas costs. Altho I was in contact with EES virtually daily since December on about the SW problems, I was told that we were able to terminate their contracts, and was not aware of the lingering exposure issue on pricing until I started getting emails last week. Needless to say I am not pleased and EES is trying to find a regulatory fix to this problem. If I had known about it last winter, I would have been able to explain it to them. I don't think I can get this fixed, and they should have kept the customers, as the delivery problems cleared up in the spring.
-----Original Message-----
From: Lawner, Leslie
Sent: Wednesday, September 12, 2001 9:52 AM
To: Sullivan, Colleen
Subject: RE: Southwest Gas

On cash-outs, Southwest takes the highest price paid for any incremental volume and applies it to all cash out volumes. This is the issue we took up at the ACC and argued that it should be based on actual costs, not the single highest price. BUT this is a different issue than the actual cost of gas for sales purposes. I would think that the sales gas is based on actual incremental costs. There is a possibility this can be audited, but we would have to go to the ACC, and as in California, they will not be at all sympathetic to us. They will view this an Enron problem. I just say that so that you don't think that I can fix this easily (I doubt that I can fix this at all, but let's see what we get from the ACC on the cash out issue, that will be a good indicator. We were clearly right on that one).

-----Original Message-----
From: Sullivan, Colleen
Sent: Wednesday, September 12, 2001 8:13 AM
To: Lawner, Leslie
Subject: RE: Southwest Gas

Leslie-
Is there any way to know what their incremental cost of gas is or how it is calculated? For example, if SW Gas buys 10,000 MMBtu total for the month at $5.00 and all other purchases were at $3.00, and EES' sales gas for that month was 90,000 MMBtu, can they charge $5.00 for all 90,000? Are there any audit rights? Also, I heard that we hired a law firm awhile back to address this issue??? Do you know anything about that or what they did/accomplished? You may be hearing more about this from Don Black or Jess Hewitt--there is a huge concern about our exposure this winter.

-----Original Message-----
From: Lawner, Leslie
Sent: Monday, September 10, 2001 4:04 PM
To: Shireman, Kristann
Cc: Sullivan, Colleen
Subject: RE: Southwest Gas

Under 3.2 of its Transportation Tariff, a SW Gas transportation customer in Arizona who returns to sales will pay the higher of the Gas Commodity Cost (plus any adjustments) or the incremental cost of gas, for a period of 12 months, and then the customer will go back to the PGA.

-----Original Message-----
From: Shireman, Kristann
Sent: Monday, September 10, 2001 3:07 PM
To: Lawner, Leslie
Cc: Sullivan, Colleen
Subject: RE: Southwest Gas

We are trying to determine the cost of gas for the customers we have turned back to SWG in Arizona.
Thx
Kris S

-----Original Message-----
From: Lawner, Leslie
Sent: Monday, September 10, 2001 2:51 PM
To: Shireman, Kristann
Subject: Southwest Gas

I assume you found the Southwest Gas Nevada tariff online and checked that rate schedules there? the commodity cost was $.49390 and there is also a balancing account adjustment. They file to change their PGA once a year and this year they have proposed no change.