Subject: Response to Proposal Issues
From: [email-masked]
To: [email-masked]
Cc: [email-masked], [email-masked]
Date: Tue, 4 Dec 2001 08:56:35 -0800 (PST)

Steve, below is a partial answer to most of your questions.  Can we set a time for Wednesday afternoon 12/5 to talk?  thanks

Max Hourly Quantity:  we are reviewing capability to deliver the MHQ in a 16 hr block.  Doesn't appear to be any problem.  What will be the plant's complete hourly capability?

Contract Rate:  will be a negotiated rate (eliminates rate risk for Gila).  The rate design is currently one-part (no differentiation between reservation and commodity).  The rate does not include AGA / GRI surcharges or fuel.  It covers a minimal return on the project's capital cost plus the ongoing O&M.

Fuel Rate:  TW does not track and adjust for actual fuel percentages.  Fuel was settled with shippers in the 1996 rate case; the offer to Panda is consistent with the current tariff.

Delivery Term:  as the term gets shorter, the rate by necessity, goes up to cover the return hurdles.

Services:  delivery pressure at the Panda / EPNG interconnect should be a minimum 750 #

Capacity of the lateral from Copper Eagle to EPNG will be 500,000 Dth/d.

Alternative rec/del combinations:  Our thought here was if Panda is willing to commit to taking capacity in the project, then TW would give you all the necessary flexibility to move gas to other destinations at the Contract rate.  For instance, Panda would be paying a one-part rate for delivery to the plant.  If for some reason, plant demand was reduced, then you would have all the flexibility to move gas to alternative markets.  

Backhaul:  the 50,000/day would be a guarantee.

Daily imbalances, short notice start up/ shut down:  We have to plan for the worst case scenario and assume there is no storage.  With this in mind, TW will have some flexibility just due to the size of the project (36" pipe and 750 - 900 # pressure) but this will depend on what other shippers are doing.  (what did we do for Southpoint / Griffith)?