Message-ID: <23708789.1075845269022.JavaMail.evans@thyme> Date: Tue, 5 Jun 2001 10:46:19 -0700 (PDT) From: victor.lamadrid@enron.com To: judy.townsend@enron.com, chris.germany@enron.com, scott.goodell@enron.com, scott.neal@enron.com, andrea.ring@enron.com, craig.taylor@enron.com, tammi.depaolis@enron.com, w..pereira@enron.com Subject: FW: FERC Rejects FTW Rates for Transco -- Again Cc: robert.allwein@enron.com, tracy.wood@enron.com, meredith.homco@enron.com, clarissa.garcia@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: quoted-printable Bcc: robert.allwein@enron.com, tracy.wood@enron.com, meredith.homco@enron.com, clarissa.garcia@enron.com X-From: Lamadrid, Victor X-To: Townsend, Judy , Germany, Chris , Goodell, Scott , Neal, Scott , Ring, Andrea , Taylor, Craig , DePaolis, Tammi , Pereira, Susan W. X-cc: Allwein, Robert , Wood, Tracy , Homco, Meredith , Garcia, Clarissa X-bcc: X-Folder: \Neal, Scott\Neal, Scott\Deleted Items X-Origin: NEAL-S X-FileName: Neal, Scott.pst fyi. -----Original Message----- From: =09Cantrell, Rebecca =20 Sent:=09Tuesday, June 05, 2001 11:17 AM To:=09Fletcher, Brenda H.; McMichael Jr., Ed; Smith, George F.; Muhl, Gil; = Townsend, Judy; Olinger, Kimberly S.; Tate, Paul; Superty, Robert; Concanno= n, Ruth; Calcagno, Suzanne; Lamadrid, Victor Subject:=09FERC Rejects FTW Rates for Transco -- Again FYI. NGI's Daily Gas Price Index published : June 5, 2001 FERC Rejects FTW Rate= s for Transco -- Again Transcontinental Gas Pipe Line Corp. last week stru= ck out again in its eight-year effort to obtain firm-to-the-wellhead (FTW) = transportation rates similar to those enjoyed by its competitors. Respondi= ng to a remand from the U.S. Court of Appeals for the D.C. Circuit, the Com= mission after conducting a "detailed review" upheld its earlier rejection o= f Transco's bid to levy two-part FTW rates on distribution customers served= by the pipeline's production-area mainline [RP92-137-050, RP93-136]. It co= ncluded that the FTW rate structure would force distributors to pay for ser= vice that's not included in their contracts with Transco. Therefore, Transc= o's existing IT-feeder transportation rates for service on its supply later= als will remain in force. The "fundamental issue" in this "long and somewh= at tortuous" case is: who should pay the fixed costs of Transco's supply la= terals -- 1) the producers and marketers who contract for service on the su= pply laterals and currently pay all of the fixed costs; or 2) Transco's fir= m transportation customers (distributors) who converted from bundled sales = to transportation on the pipeline's mainline? The producers and marketers, = who transport gas on Transco's supply laterals, favor a switch to a two-par= t FTW rate structure because it would lighten their fixed-cost burden. Tran= sco advocates the rate shift because it believes this would encourage more = producers to attach their supplies to its system. But the pipeline's distri= butor customers are opposed to being charged FTW rates on supply laterals, = which they don't use. FERC agreed with Transco's distributor customers -- = who it calls FT-conversion customers -- in its remand decision. After condu= cting a lengthy examination, "we conclude that the FT- conversion customers= ' firm contracts [distributors] with Transco do not include service on the = supply laterals. Rather, the producers and marketers contract and pay for t= he IT-feeder service [on the laterals]," last week's order noted. "Therefor= e, the 'Memphis' clauses of the FT-conversion shippers' contracts cannot au= thorize Transco to require the FT-conversion customers to pay two-part rate= s for service on the supply lateral not included in their contracts. We, th= erefore, reaffirm our rejection of Transco's proposal to unilaterally impos= e FTW service on the FT-conversion shippers." =09