Message-ID: <1379283.1075846734801.JavaMail.evans@thyme> Date: Wed, 23 Aug 2000 03:42:00 -0700 (PDT) From: susan.scott@enron.com To: michele.winckowski@enron.com Subject: Re: Caithness Big Sandy, LLC. Project Cc: drew.fossum@enron.com, mary.miller@enron.com, maria.pavlou@enron.com, dari.dornan@enron.com, glen.hass@enron.com, keith.petersen@enron.com, jeffery.fawcett@enron.com, sstojic@gbmdc.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: drew.fossum@enron.com, mary.miller@enron.com, maria.pavlou@enron.com, dari.dornan@enron.com, glen.hass@enron.com, keith.petersen@enron.com, jeffery.fawcett@enron.com, sstojic@gbmdc.com X-From: Susan Scott X-To: Michele Winckowski X-cc: Drew Fossum, Mary Kay Miller, Maria Pavlou, Dari Dornan, Glen Hass, Keith Petersen, Jeffery Fawcett, sstojic@gbmdc.com X-bcc: X-Folder: \Susan_Scott_Dec2000_June2001_1\Notes Folders\'sent mail X-Origin: SCOTT-S X-FileName: sscott3.nsf I agree that the proposed facilities could be constructed under the prior notice provisions of TW's blanket certificate if the cost and environmental requirements are met. The facilities appear to meet the criteria for an "eligible facility" under section 157.202(b)(2)(i): they are necessary to provide service to Big Sandy within existing mainline certificate levels, and according to my research the facilities are similar to those that the Commission routinely has found to be eligible under a blanket certificate. The prior notice project cost limit for year 2000 is $20,200,000. (Sec. 157.208). If the project is not within this cost limit we will need to seek a 7(c) certificate. I've researched the incremental rate question and here's what I've been able to find out: In the context of a 7(c) application, FERC generally requires use of existing Part 284 rates. This was the case when TW applied for a certificate to construct the San Juan lateral. TW requested a separate zone rate for the lateral in that proceeding but FERC stated that a section 7 proceeding was not the appropriate forum. The Commission stated, however, that it would be willing to entertain an abbreviated Section 4 filing by TW to revise its Part 284 rates to inclue zone rates for the lateral. So TW made a Section 4 filing and got zone rates approved based on the cost of service for the lateral. Whether we construct the Big Sandy lateral under the blanket certificate or not, it appears that we would have to file a limited section 4 if we want to implement rates for the lateral that are different from the West of Thoreau rates. As for whether an open season would be required, I assume it would not be if Caithness is going to fully subscribe the capacity on the lateral. However, if other shippers are interested and we want to get the best rate we'll probably want to have an open season. In any event, in the context of a 7(c) application FERC is going to put us at risk for recovery of costs, so it would be to our advantage to sell 100% of the new capacity. At this point I am uncertain whether we even want or need different rates for the Big Sandy lateral...ultimately it will depend on the cost of the project and what rates would make it economic for TW to proceed. I hope this helps...if there are further questions or if any of this does not sound right to you let me know. Michele Winckowski 08/17/2000 01:39 PM To: Drew Fossum/ET&S/Enron@ENRON, Mary Kay Miller/ET&S/Enron@Enron, Maria Pavlou/ET&S/Enron@ENRON, Dari Dornan/ET&S/Enron@Enron, Glen Hass/ET&S/Enron@Enron cc: Keith Petersen/ET&S/Enron@ENRON, Jeffery Fawcett/ET&S/Enron@ENRON, Susan Scott/ET&S/Enron@ENRON Subject: Re: Caithness Big Sandy, LLC. Project As you are aware, Transwestern is working with a shipper to potentially provide service to a new power plant located approximately 40 miles off the mainline in Arizona. Although, the final negotiation are not complete certain options are being evaluated, I need some assistance in interpreting the regulations regarding the authority we should use for approval of this project. The facilities that would be constructed include a delivery point and approximately 40 miles of pipe. As these facilities are non-mainline, it may be possible to construct the proposed facilities under the prior notice provisions of TW's blanket certificate, provided the project satisfies the blanket criteria (generally costs and environmental). With this in mind, I have the following issues and questions: Preliminarily, marketing is thinking that we may want to develop an incremental rate to recover the cost of the project. Would a new incremental rate for this service impact our ability to file for approval under the prior notice provisions? Note: Generally, Subpart F of Part 157 (blanket regulations) does not address service issues as transportation service is provided under Part 284 of the Commission's regulations. However, the regulations (o157.204) set forth Who may apply for a blanket certificate. The criteria includes, among other things, any interstate pipeline that has rates accepted by the Commission. Therefore, would an incremental rate have to be approved by the Commission before the proposed facilities would be blanket eligible? Can a new incremental rate be established through a limit-section 4 rate filing or is a case-specific certificate required? As the facilities will not include any mainline expansion - Is an open season required for the project? My opinion is "NO". Do you agree? Your thoughts and assistance in this matter would be greatly appreciated. Thanks MW