Message-ID: <22976702.1075842535512.JavaMail.evans@thyme> Date: Mon, 19 Feb 2001 02:35:00 -0800 (PST) From: drew.fossum@enron.com To: dari.dornan@enron.com, mary.miller@enron.com, kent.miller@enron.com, steve.kirk@enron.com Subject: Texas Eastern Cc: shelley.corman@enron.com, maria.pavlou@enron.com, susan.scott@enron.com, lee.huber@enron.com, tony.pryor@enron.com, dorothy.mccoppin@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: shelley.corman@enron.com, maria.pavlou@enron.com, susan.scott@enron.com, lee.huber@enron.com, tony.pryor@enron.com, dorothy.mccoppin@enron.com X-From: Drew Fossum X-To: Dari Dornan, Mary Kay Miller, Kent Miller, Steve Kirk X-cc: Shelley Corman, Maria Pavlou, Susan Scott, Lee Huber, Tony Pryor, Dorothy McCoppin X-bcc: X-Folder: \Drew_Fossum_Dec2000_June2001_2\Notes Folders\All documents X-Origin: FOSSUM-D X-FileName: dfossum.nsf Either I didn't fully understand the December Texas Eastern order or else FERC has just put a new and unhelpful spin on it. The Thursday rehearing order dramatically changes how the "shipper must have title" rule applies to acquisitions of upstream capacity. I thought the Dec. order pretty clearly allowed a pipe to acquire upstream capacity and then resell that capacity under the acquiring pipeline's rate schedules. FERC specifically held that the "shipper must have title" policy won't be applied if the acquiring pipe treats the acquired capacity "as though it were part of its own system". (p. 61,886) The Dec. order even cited TW's acquisition of park n ride capacity from PG&E as an example of the type of transaction that (I thought) could be done without advance Commission approval. Now, FERC explains that it did not intend a "blanket waiver" of the shipper must have title policy. Pipes can still acquire upstream capacity without advance FERC permission, but only if the acquiring pipe is going to use the acquired capacity for operational needs or to resell under the selling pipe's release mechanism. If the acquiring pipe wants to use the acquired capacity to support sales of service under the acquiring pipe's rate schedules, a specific waiver of the "must have title" policy is required (see FN 20 and text). We are right back to where we started. I guess the orders signal that FERC is much more likely to grant waivers of the "must have title" policy than in the past, but I don't think we are good to go to acquire upstream storage, for example, and resell it as FDD or IDD until we get permission first. Shelley--let me know if you hear any expressions of outrage from other pipes. This might be worth chasing on rehearing since it is such a clear about face by FERC.