Message-ID: <2074167.1075846665531.JavaMail.evans@thyme>
Date: Mon, 12 Jun 2000 05:31:00 -0700 (PDT)
From: susan.scott@enron.com
To: tony.pryor@enron.com
Subject: thoughts on Enrononline
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X-From: Susan Scott
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Tony, I thought there would be a case that stated that if an interstate 
pipeline posts the criteria under which it will evaluate capacity bids, it 
must stick to those criteria and not award the capacity to a bidder on some 
other basis.  It seems a simple enough extension of the principle that 
capacity must be awarded on a nondiscriminatory basis.  However, I did not 
find any case that stands for that exact proposition.  As you may be aware, 
the Commission made Natural Gas Pipeline Company of America (NGPL) come up 
with a way to ensure that it awarded capacity one a nondiscriminatory 
basis...because NGPL was found to have been giving preferential treatment to 
its shippers.  NGPL's solution was to come up with an auction process, and 
there is a whole line of cases if you're interested.  The underlying 
presumption is that if you set up a system under which all capacity is 
awarded and stick with that system, there is no way you could be acting 
discriminatorily.  But of course the Commission never comes out and says this 
even though it should be obvious.

Probably the best we can do is extrapolate from 1) the tariff and 2) the NGA 
(doesn't it also say we have to provide service on a not unduly discrim. 
basis?).  Also, in your memo I'd give an example; i.e., if we notify shippers 
of our auction process and set a deadline for bidding, but then award the 
capacity to Sempra (assuming Sempra requested capacity after the posting), we 
will have unduly discriminated against all the other shippers who had to 
participate in the auction process.  

Maybe in future postings on Enrononline we should include a statement to the 
effect that the capacity posted will not be awarded except thru the 
Enrononline process.

Now for some trivia.  Remember we were discussing with Shelley whether we 
could post a different method (other than that prescribed in the tariff) for 
determining best bid?  In my Westlaw search I ran across the relevant case.  
In Northwest Pipeline, 85 FERC P 61,335, the Commission stated:  "The 
Commission has previously given pipelines the leeway, in open season 
provisions, to either include in their tariff a single non-discriminatory bid 
evaluation methodology, or provide themselves the flexibility of choosing 
different non-discriminatory bid evaulation methods for different 
transactions, provided that the pipeline posts the bid evaluation methodology 
before the bidding process begins."  The only problem is I am not sure we 
have that "flexibility" since the tariff does not expressly allow us to post 
a different method.  Maybe next time we do a tariff cleanup we could add some 
language allowing us to do so.

I have to move on to my next project but if you want me to comment on what 
you write I'd be happy to.