Message-ID: <26969503.1075849653883.JavaMail.evans@thyme> Date: Thu, 14 Dec 2000 00:47:00 -0800 (PST) From: john.hodge@enron.com To: phil.demoes@enron.com, les.webber@enron.com, john.griffith@enron.com, mark.breese@enron.com Subject: Transco's Momentum Expansion and Elba Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: John Hodge X-To: Phil DeMoes, Les Webber, John Griffith, Mark Breese X-cc: X-bcc: X-Folder: \John_Griffith_Nov2001\Notes Folders\Discussion threads X-Origin: GRIFFITH-J X-FileName: jgriffit.nsf As a result of discussions for capacity to serve electric generation sites in Georgia through Transco's Momentum Expansion, Transco has proposed a rate of $0.32 plus 2.35% fuel for receipts in Zone 3 (Station 65) and deliveries in Zone 4. If you assume fuel on a gas cost of $4.00 ($.095 fuel), then the total rate is $0.415. Assuming the aforementioned rate, Southern Company can pay Transco $0.415 or purchase gas from Elba and backhaul on Sonat at a rate of $0.22 which would netback to Elba at Hub + $0.195. If you assume a basis of $0.01 for gas on Transco Zone 3, then the netback goes up to Hub plus $0.205. Transco has also offered a $0.27 Momentum rate for receipts from Station 85/Destin (Zone 4) and deliveries in Georgia. With fuel at 1.9% and $4.00 gas, the total rate is $0.35. However, basis at Station 85 is $0.04 and that takes the delivered cost up to Hub + $0.39. This delivered price would yield a backhaul netback to Elba at Hub + $0.17. Since Southern Company can site generation in Sonat Zone 2 (Alabama) or Zone 3 (Georgia), they are probably unwilling to pay this high a netback price at Elba. Additionally, most power developers will not commit to a baseload quantity given that they will be serving a peaking market. One alternative is to sell to existing firm shippers on the Sonat system that would view Elba as a savings on variable cost on their FT agreement. The net is a Hub + $0.10 at Elba assuming a basis of $.04 at Destin. Through discussions with Phil Demoes, Southern Company has stated that a price of Hub + $0.20 was out of the question. Phil indicates that we could probably strike a deal between their bid of Hub + $0.12 and Hub + $0.17.