Subject: RE: Red Rock form contract
From: [email-masked]
To: [email-masked], [email-masked], [email-masked]
Cc: [email-masked], [email-masked], [email-masked], [email-masked], [email-masked]
Date: Wed, 28 Mar 2001 10:28:16 -0800 (PST)

Dot is right with regard to the termination provision.
It was a Natural case.
But it was more than a year or two ago.
(Time flys when you are having fun.)

It was the contracting practices order issued October 16, 1996.  77 FERC 61,028.
The order on rehearing was issued March 26, 1998.  82 FERC 61,298.

In both orders the Commission said that the unilateral right to terminate is like a
"semi-firm" rate and a separate rate schedule is required.  Specifically, the Commission said:

	Under Natural's currently effective tariff provisions governing firm
	service, it may offer day-to-day, week-to-week, or month-to-month
	rollovers if it so chooses: but the length of the term must be selected
	by the shippers.  Natural may not control the length of the firm service
	by inserting a unilateral right to cancel in its service agreements.  As
	we indicated in the October 16 order, Natural could achieve the 
	'maximization of firm capacity' and administrative convenience of its 
	term provision with a 'semi-firm' rate schedule on file in its tariff.  
	However, Natural cannot provide such a service without a rate schedule
	for that service on file.  [Footnotes omitted.]  82 FERC at 62,178.

Not sure about the rest of the wording of the proposed provision.
The attached language did not come across to me as a part of Dot's e-mail.

Frazier

 -----Original Message-----
From: 	McCoppin, Dorothy  
Sent:	Tuesday, March 27, 2001 10:57 AM
To:	Fossum, Drew; Miller, Mary Kay
Cc:	Scott, Susan; Harris, Steven; Hyatt, Kevin; Corman, Shelley; Pavlou, Maria
Subject:	Red Rock form contract

	I thought that, in the Natural case (from a year or two ago, right?), FERC had a problem with Natural terminating 
	in connection with a shipper releasing the capacity -- i.e., FERC saw the provision as preventing the shipper from 
	being able to release capacity.  (As I recall, instead of simply saying that the discount would no longer be valid if 
	the capacity were to be released, Natural had the right to terminate the contract.  I do not recall that the FERC 
	had a problem with any termination right by a pipeline, for any reason.  However, termination is a serious remedy -- 
	so reverting to the max rates [or having the rate re-negotiated by the parties] would probably be seen much more 
	favorably by FERC as an appropriate remedy.)

 -----Original Message-----
From: 	Pavlou, Maria  
Sent:	Tuesday, March 27, 2001 9:32 AM
To:	Fossum, Drew; Miller, Mary Kay
Cc:	Scott, Susan; Harris, Steven; Hyatt, Kevin; McCoppin, Dorothy; Corman, Shelley
Subject:	RE: Red Rock form contract

	I thought a pipeline having unilateral termination rights was a problem under Natural.  Maria

 -----Original Message-----
From: 	Fossum, Drew  
Sent:	Tuesday, March 27, 2001 8:29 AM
To:	Miller, Mary Kay
Cc:	Pavlou, Maria; Scott, Susan; Harris, Steven; Hyatt, Kevin; McCoppin, Dorothy; Corman, Shelley
Subject:	RE: Red Rock form contract

I like the new language, but have added a couple of changes in the redlined version attached hereto (I think mine are in blue).  One of the changes is for clarity and one is to make the contract terminable at our option instead of automatically terminated if the neg. rate is invalidated and our max rate is lower than the Rate [we may want to preserve the contract in that scenario if the market value is even lower than the max. rate!!]   On MKM's point, I think the only contract we have sent out is to CalPine, right???  I think we explain it to them as a mechanism that is designed to preserve our benefit of the bargain if FERC changes the rules in the middle of the game.  If they choke on it, we probably have to take the risk with them since they are are our baseload tenant.  As to other shippers that we haven't sent the contract to, we ought to push very hard to get language like this.  I'm sending to Shelley and Dot to get their insight.  Dot--have you guys done anything analogous in your precedent agreements on the many Florida projects?  Not necessarily on neg. rates,  but FERC-outs in general?    DF 

 << File: FERC out amendmentrl.doc >> 

 << OLE Object: Picture (Device Independent Bitmap) >> 	  From:  Mary Kay Miller                           03/26/2001 05:13 PM	

To:	Maria Pavlou/ENRON@enronXgate
cc:	Susan Scott/ENRON@enronXgate, Drew Fossum/ET&S/Enron@ENRON, Steven Harris/ET&S/Enron@ENRON, Kevin Hyatt/ENRON@enronxgate 

Subject:	RE: Red Rock form contract   << OLE Object: StdOleLink >> 

These changes look good to me, but how are we going to communicate this without raising a big flag that we are concerned with negotiated rate deals?   MK

From:	Maria Pavlou/ENRON@enronXgate on 03/26/2001 04:13 PM
To:	Susan Scott/ENRON@enronXgate, Drew Fossum/ET&S/Enron@ENRON, Steven Harris/ET&S/Enron@ENRON, Kevin Hyatt/ENRON@enronxgate, Mary Kay Miller/ET&S/Enron@ENRON
cc:	 

Subject:	RE: Red Rock form contract

Here are my suggestions. Thanks, Maria

 << File: FERC out amendment.doc >> 
 -----Original Message-----
From: 	Scott, Susan  
Sent:	Monday, March 26, 2001 3:42 PM
To:	Fossum, Drew; Harris, Steven; Hyatt, Kevin; Pavlou, Maria; Miller, Mary Kay
Subject:	Red Rock form contract

At Drew's request I've drafted the attached language to address the possibility that FERC might change its negotiated rate policy statement or otherwise invalidate the negotiated rate in the contract.  Stan brought this idea up at this morning's staff meeting (for those of you who, like me, weren't in attendance).  Please comment.
 << File: FERC out amendment.doc >>