Message-ID: <13830722.1075857863379.JavaMail.evans@thyme> Date: Sat, 11 Nov 2000 05:06:00 -0800 (PST) From: parker.janice@epenergy.com To: acctdept@alaweb.com, achaber@entergy.com, akidd@marathonoil.com, alexandria_w_valentine@cngp.cng.com, anr.measuremt@coastalcorp.com, asbcoast@aol.com, barry.sullivan@ferc.fed.us, beeson.erika@epenergy.com, bfreeman@aglresources.com, bmurphy@pipeline.scana.com, broussc@texaco.com, bweaver@energen.com, calvinb@noex.com, cboyd@duke-energy.com, ccolbert@aglresources.com, charles.jacobini@acnenergy.com, cheldman@ix.netcom.com, cheronharris@psenergy.com, cjro@dynegy.com, cmcghee-frankhouser@elfexp.com, cypop@aol.com, dcspivey@alltel.net, ddotson@aglresources.com, ddslrh@vastar.com, dfitzpatrick@reliantenergy.com, dlippe@texicannaturalgas.com, dluquet@energy.twc.com, dmcneely@mindspring.com, dmolina@coral-energy.com, dogden@cng.com, dscott1@columbiaenergygroup.com, dtellier@bepco-fw.com, ecoston@energen.com, eklumpp@vastar.com, estanek@aglresources.com, fgmendez@cmsenergy.com, gasdept@rose.net, gbennett@ccng-inc.com, gregcaudell@utilityservicegroup.com, guyon.ck@pg.com, hgleason@sempratrading.com, ignasm@pogoproducing.com, interconn@mindspring.com, jameskirby@psenergy.com, jay.winter@eprime.com, jbossie@mindspring.com, jcavallin@scana.com, jenniferwaddell@mindspring.com, jessicasullens@utilityservicegroup.com, jgrejda@pepco-services.com, jhtaylor@mindspring.com, jhyche@rivergas.com, jim.cook@opc.com, jmw@huntpetroleum.com, jscabare@aglresources.com, jward@vastar.com, kathryne@gulfmarkenergy.com, keypro@iamerica.net, kgamble@tds.net, khodges@reliantenergy.com, kim.bruno@ferc.fed.us, kodom@aglresources.com, krh@huntpetroleum.com, ktaylor2@scana.com, kthompson@pepco-services.com, kvanwagner@reliantenergy.com, ladmire@superiornatgas.com, larry.gentry@oceanenergy.com, lcampbel@enron.com, ldailey@mindspring.com, ldavis@waverlymin.com, lhauesler@wgl.albanyga.org, ljro@dynegy.com, llperret@aep.com, lnsmarie@msn.com, macorp@mindspring.com, mark.w.dettmers@wgp.twc.com, mary_mccoy@oxy.com, mbabin@forcenergy.net, mbostwick@elfexp.com, mcasas@statoilenergy.com, mfleming@ees.enron.com, mjdavis@mindspring.com, mjones@infiniteenergy.com, mrichard@sylacauga.net, mveal@texicangas.com, npalacio@beaconenergy.com, pat@meam.com, pettwayk@pogoproducing.com, pgordy@br-inc.com, pmckay@energen.com, reidson@howellcorp.com, rjackson2@scana.com, rlawrence@coral-energy.com, rlewis@eqt.com, rlight@hiwaay.net, roland.woodard@ergon.com, rwwalker@aep.com, scrane@shellus.com, sgoodel@columbiaenergy.com, shelia@equinoxoil.com, sloving@enron.com, sperry@statoilenergy.com, stephanie_stehling@perrygas.com, thubbs@kub.org, tmsmith@gas-authority.com, tolleson.kathy@epenergy.com, triongas@wavegate.com, trish_garant@perrygas.com, vhgaston@southernco.com, vrawles@cmsenergy.com, vtrangtrakul@ftenergy.com, vvesuvio@infiniteenergy.com, wendy_kliebert@fmi.com, wlbdraft@surfsouth.com, wlsheehan@mindspring.com, wphelts@mindspring.com, wtpompili@shellus.com Subject: Summary of SNG's Order 637 Proposals Cc: hancock.leslie@epenergy.com, parker.janice@epenergy.com, hyde.renee@epenergy.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: hancock.leslie@epenergy.com, parker.janice@epenergy.com, hyde.renee@epenergy.com X-From: "Parker, Janice" X-To: acctdept@alaweb.com, achaber@entergy.com, akidd@marathonoil.com, alexandria_w_valentine@cngp.cng.com, anr.measuremt@coastalcorp.com, asbcoast@aol.com, Barry.sullivan@FERC.fed.us, "Beeson, Erika" , bfreeman@aglresources.com, bmurphy@pipeline.scana.com, broussc@texaco.com, bweaver@energen.com, calvinb@noex.com, cboyd@duke-energy.com, ccolbert@aglresources.com, Charles.jacobini@acnenergy.com, cheldman@ix.netcom.com, Cheronharris@psenergy.com, cjro@dynegy.com, cmcghee-frankhouser@elfexp.com, cypop@aol.com, dcspivey@alltel.net, ddotson@aglresources.com, ddslrh@vastar.com, dfitzpatrick@reliantenergy.com, dlippe@texicannaturalgas.com, dluquet@energy.twc.com, dmcneely@mindspring.com, DMolina@coral-energy.com, dogden@cng.com, dscott1@columbiaenergygroup.com, dtellier@bepco-fw.com, ecoston@energen.com, eklumpp@vastar.com, Estanek@aglresources.com, fgmendez@cmsenergy.com, gasdept@rose.net, gbennett@ccng-inc.com, gregcaudell@utilityservicegroup.com, guyon.ck@pg.com, hgleason@sempratrading.com, ignasm@pogoproducing.com, Interconn@mindspring.com, jameskirby@psenergy.com, jay.winter@eprime.com, jbossie@mindspring.com, jcavallin@scana.com, jenniferwaddell@mindspring.com, jessicasullens@utilityservicegroup.com, jgrejda@pepco-services.com, jhtaylor@mindspring.com, Jhyche@rivergas.com, jim.cook@opc.com, jmw@huntpetroleum.com, jscabare@aglresources.com, jward@vastar.com, KathrynE@gulfmarkenergy.com, keypro@iamerica.net, kgamble@tds.net, khodges@reliantenergy.com, kim.bruno@ferc.fed.us, Kodom@aglresources.com, krh@huntpetroleum.com, Ktaylor2@scana.com, kthompson@pepco-services.com, kvanwagner@reliantenergy.com, ladmire@superiornatgas.com, larry.gentry@oceanenergy.com, lcampbel@enron.com, ldailey@mindspring.com, ldavis@waverlymin.com, lhauesler@wgl.albanyga.org, ljro@dynegy.com, llperret@aep.com, lnsmarie@msn.com, Macorp@mindspring.com, mark.w.dettmers@wgp.twc.com, Mary_McCoy@oxy.com, mbabin@forcenergy.net, Mbostwick@elfexp.com, mcasas@statoilenergy.com, mfleming@ees.enron.com, mjdavis@mindspring.com, mjones@infiniteenergy.com, mrichard@sylacauga.net, mveal@texicangas.com, npalacio@beaconenergy.com, Pat@meam.com, pettwayk@pogoproducing.com, pgordy@br-inc.com, pmckay@energen.com, reidson@howellcorp.com, rjackson2@scana.com, rlawrence@coral-energy.com, rlewis@eqt.com, rlight@hiwaay.net, roland.woodard@ergon.com, rwwalker@aep.com, scrane@shellus.com, sgoodel@columbiaenergy.com, shelia@equinoxoil.com, sloving@enron.com, sperry@statoilenergy.com, stephanie_stehling@perrygas.com, thubbs@kub.org, Tmsmith@gas-authority.com, "Tolleson, Kathy" , triongas@wavegate.com, trish_garant@perrygas.com, vhgaston@southernco.com, vrawles@cmsenergy.com, Vtrangtrakul@ftenergy.com, vvesuvio@infiniteenergy.com, wendy_kliebert@fmi.com, wlbdraft@surfsouth.com, wlsheehan@mindspring.com, wphelts@mindspring.com, wtpompili@shellus.com X-cc: "Hancock, Leslie" , "Parker, Janice" , "Hyde, Renee" X-bcc: X-Folder: \Larry_Campbell_Dec2000\Notes Folders\Discussion threads X-Origin: Campbell-L X-FileName: lcampbel.nsf PRIVILEGED AND CONFIDENTIAL - FOR SETTLEMENT DISCUSSIONS ONLY November 11, 2000 To All Parties in FERC Docket No. RP00-476 Subject: Proposals for Southern's Order No. 637 Meeting On August 15, 2000, Southern filed proposed changes to its services in Docket No. RP00-476 in response to the requirements of FERC Order No 637. As a result of customer comments on its filing, Southern posted a notice of a meeting with parties that intervened in this proceeding to be held as follows: Date: Thursday, November 16, 2000 Time: 10:00 a.m. - 4:30 p.m. (Eastern Time) Location: Hartsfield Airport in Atlanta, Georgia, in the Executive Conference Center, Airport Atrium, Suite 300 (see directions below) We have a few spaces left at the meeting. To RSVP, please call Ms. Lane Fletcher at 205-325-7109. Our goal for this meeting is to gain a common understanding of all the proposals and to reach consensus solutions on the issues that have been raised. To facilitate discussion and resolution at the meeting, Southern provides the following summary of customer comments it received and additional changes Southern is willing to make in the context of a settlement of all issues. If you have any questions about these proposals, please do not hesitate to contact me (205) 325-3509 or Patty Francis (205) 325-7696 prior to the meeting. Janice H. Parker Director, Customer Services (205) 325-3509 parkerj@epenergy.com * * * * * * * * * * Directions to the Executive Conference Center, Airport Atrium, Suite 300, Hartsfield Airport, Atlanta, GA 1. After departing from your plane: Follow the directions to the baggage claim area. In the baggage claim area, follow the flow of traffic up the escalator. Turn right for entrance into the Atrium (an area similar to a shopping mall) located in the center of the airport between the North and South terminals. Inside the Atrium, catch the elevator to the 3rd floor. The Executive Conference Center is located beside Houlihan's Restaurant. 2. From ground level: After your arrival at Hartsfield Airport, come to the second (2nd) level. Pass through Ticketing or Baggage Claim and come to the area where the Car Rental Agencies are located (between North and South terminals). Notice signs above for the Atrium (an area similar to a shopping mall). Inside the Atrium, catch the elevator to the 3rd floor. The Executive Conference Center is located beside Houlihan's Restaurant. * * * * * * * * * * FOR SETTLEMENT DISCUSSIONS ONLY Summary of Customer Comments and Southern's Responsive Proposals Docket No. RP00-476 I. OFOs AND PENALTIES Comment 1: Provide objective criteria for issuing and lifting OFOs including information that will help customers better understand operational situation being addressed Response: SNG does or will post warnings and forecasts in advance of OFOs and will work with customers to clarify tariff language on a mutually agreeable basis Comment 2: A $15.00 penalty for Type 3 Alert Mode OFO is not reasonable; $7.50 is more reasonable Response: In the spirit of compromise, SNG would be willing to decrease the penalty to $10.00 per dth as part of a settlement package. Comment 3: The short notice and harsh penalty of the Type 3 Emergency Mode OFO is unreasonable for the following reasons: - Customers need more time to make adjustments o Only implement if a Type 3 Critical Mode OFO is already in place o 12 hours notice would be more appropriate - Limit application to abusive shipper behavior - Clarify tariff that penalty only applies at start of gas day and not intraday - Shorter notice is not justified because if implemented too late, a firm shipper cannot bump IT on last nomination cycle - Justify adding the gas price to the penalty - The increased penalty price is really an increase in imbalance charges without other benefits - Use Gas Daily's "Midpoint Louisiana - Onshore South" daily index price instead of the one proposed Response: As part of a settlement package, SNG is willing to make the following changes to its Type 3 Emergency Mode OFO. - Type 3 Emergency Mode OFO can be implemented at the start of the gas day on (i) 20 hours prior notice, or (ii) 4 hours prior notice ONLY if a Type 3 Alert or Critical Mode OFO is in effect for the previous day; telephone notice will be given when the penalty is upgraded to Emergency. - Language limiting the application of each OFO is set forth in Section 41 of the tariff's general terms and conditions. SNG is willing to repeat this language in this specific OFO section of the tariff, however, so that customers feel comfortable that implementation of this penalty will be targeted to the operational problem areas on the system or specific offenders whenever possible. - SNG will clarify that penalties only apply at the start of a gas day and can be cancelled during a gas day if not needed due to a change in conditions. - Since advance notice must always be given prior to the start of a gas day (9:00 a.m. CCT), shippers can adjust nominations on the Intraday 1 nomination cycle (10:00 a.m. CCT) and bump IT. - At the meeting, SNG will further discuss the reasons its penalties (including the higher penalty for Type 3 Emergency Mode) are needed to preserve the operational integrity of the system. Comment 4: The change to Type 5 OFOs could result in a shipper in a group being penalized even if it is within tolerance at a point Response: At the meeting, SNG will review an example of how the proposed changes to the Type 5 OFO will actually avoid shipper-specific penalties at a point when the point or group of receipt points is within tolerance. This provision will only help, never hurt, a shipper. II. SEGMENTATION Comment 1: SNG currently allows firm shippers to segment their capacity by rate zone. It should be operationally feasible to provide more segmentation, especially along Southern's two main trunklines. Response: SNG has reviewed its operational model and has isolated two "long line" segments of its pipeline along which it could allow intrazone segmentation in an operationally feasible manner. At the meeting, SNG will review the physical attributes of its system that led to this model. To be able to provide this level of intrazone segmentation, the program would have the following attributes: - SNG will retain its existing segmentation program, but will layer on top of that the ability for a shipper to fully segment along identified long line segments of its north or south system up to the firm capacity that the customer has on the long line being segmented. For example, if a customer has north system capacity into zone 2, it can do intrazone segmentation along the long line portion of the north system through zone 2 up to its contract quantity on the north system. - On the long line on which the shipper has firm capacity, the shipper can nominate to primary or secondary delivery points so long as the nominations do not overlap along the long line segment. - The shipper will have to path its receipts and deliveries for the portion of its nomination where it wishes to do intrazone segments. This allows SNG to verify that segments do not overlap. The first delivery point being segmented can be served by an upstream supply pool or storage, but all downstream segments must be served by physical receipt-to-delivery combinations. - Allocated receipts serving an intrazone segmented delivery would have to meet or exceed the segmented delivery to avoid overlapping segments and qualify for the FT commodity rate. - SNG is in the process of determining the programming requirements to add this new, more complex model and will provide an estimate at the meeting. III. CAPACITY RELEASE AND SCHEDULING EQUALITY Comment 1: SNG should allow customers to offer and bid on capacity release deals before each of the four nomination cycles. (In its filing, Southern has offered to enhance its capacity release procedures to allow prearranged, non-biddable deals to be awarded prior to each nomination cycle, but keep biddable deals awarded according to the GISB standards prior to the Timely Nomination Cycle.) Response: While Southern is not required to offer these additional options under Order No. 637, it would be willing, as part of a settlement, to add an offer/bid capacity release opportunity prior to the Evening Nomination Cycle. GISB is developing standards for intraday capacity releases, and Southern proposes to wait until the standards are approved to offer more flexibility due to the programming complexity. Comment 2: Changes that require programming should be implemented as soon as possible if ready prior to the time estimated by SNG in its filing. Response: Southern will implement all changes as soon as the programming is ready, and it will give 30 days advance notice of the implementation date. Comment 3: Southern should allow releases of FT-NN service on a no-notice basis as soon as possible. Response: As noted in its filing, Southern is in the process of programming this functionality and proposes to implement it on March 1, 2001. Southern plans to make its tariff filing in mid-January 2001, and will host a conference call to discuss the tariff filing in early December 2000. IV. IMBALANCE MANAGEMENT AND MISCELLANEOUS ITEMS Comment 1: Customers need more than 3 business days to elect to trade imbalances because imbalances are not final at the time of the election deadline. Response: Effective December 1, 2000, for November imbalances, Southern has filed to implement the new GISB standard that gives customers 17 business days after the end of the month to elect to trade imbalances and to complete the trades. Comment 2: Southern should allow customers to use other customers' CSS/ISS storage accounts to resolve imbalances at the end of the month. Response: While Southern is concerned that this may increase the level of imbalances, in an overall settlement, it would be willing to add this option, subject to active confirmation by the other customer whose storage account is used to resolve the imbalance. Comment 3: Imbalances and overrun penalties should be based on the lesser of operational or actual data. Response: Southern calculates both an estimated imbalance percentage (on the last day of the month) and an actual imbalance percentage and uses the lesser of the two percentages when cashing out imbalances. On the overrun comment, Southern bills all volumes actually metered, but fills up a customer's firm transportation service within a zone prior to billing IT overrun. Comment 4: Cash out revenues in excess of the index prices, less expenses incurred by SNG for cash out gas, should be credited to the SCRM account. Response: Southern does credit all revenues received for cash out and will provide an overview of the items that affect the SCRM account at the meeting. Comment 5: Southern received comments in support of and in opposition to the collection of injection or withdrawal fees on the net imbalance resolved with storage at the end of the month. It was suggested that Southern should go further and collect the fee on the daily (instead of net) imbalance resolved through storage. Response: Southern believes that its proposal is reasonable and equitable for the reasons given in its filing. Comment 6: Southern should be required to honor discounts to alternate delivery points within the capacity path of the point receiving the discount. Response: Generally, FT reservation charge discounts continue to apply even when alternate delivery points are nominated. Any limitations on the applicability of the discount to specific points will be agreed to as part of the discount and will be set out in the discount exhibit. [THIS DOCUMENT IS PRIVILEGED AND CONFIDENTIAL AND INTENDED FOR SETTLEMENT DISCUSSIONS ONLY. ANY OTHER USE OR PUBLICATION OF THIS DOCUMENT, IN WHOLE OR IN PART, IS RESTRICTED UNLESS WRITTEN PERMISSION IS RECEIVED FROM SOUTHERN NATURAL GAS COMPANY.] ****************************************************************** This email and any files transmitted with it from El Paso Energy Corporation are confidential and intended solely for the use of the individual or entity to whom they are addressed. If you have received this email in error please notify the sender. ******************************************************************