Subject: Resubscription Rates in 2010 Plan
From: [email-masked]
To: [email-masked], [email-masked]
Cc: [email-masked], [email-masked]
Date: Wed, 13 Feb 2002 15:14:21 -0800 (PST)

I would recommend the following assumptions for capacity resubscription from now through Q3 2006:

The historical average rates should be assumed for the resubscription of East and Ignacio to Blanco capacity rolling-off during this time period.  The forward curves that have been discussed represent the value of capacity to California, not East to East or Ignacio to Blanco capacity.  I don't think that max rates for the capacity represented in these groups is appropriate.

The max rate at $.1020 is appropriate for the San Juan group.

The appropriate max rate for the West group is $.2868.

The volume of Ignacio to Blanco capacity available for resubscription should be reduced.  Today, we have contracts from Ignacio to the Blanco Hub that then continue on Transwestern on another contract.  (These contracts existed before Transwestern owned this line and were assigned to Transwestern when we purchased the facilities from NWPL.)  Because of this "artificial break" in the contracts, Transwestern is collecting the San Juan lateral rate once on a contract from Ignacio to Blanco and then again on another contract from Blanco to Thoreau (or to the CA border).  In the future, when this capacity is resubscribed, the contracts will most likely not be split at the Blanco Hub and Transwestern will only extract the San Juan lateral rate once from Ignacio to Thoreau (or to the CA border).  Jan and I will look at the Ignacio capacity that has historically continued on Transwestern south of the Blanco Hub (vs. delivering to El Paso at Blanco).  We will come up with a % to be applied to the Ignacio to Blanco capacity that should be resubscribed at a zero rate (or the capacity to be resubscribed can be reduced - whichever is easier to put in the model).