Subject: PRIVILEGED & CONFIDENTIAL Attorney/Client Communication: Your TW Capacity Options questions
From: [email-masked]
To: [email-masked]
Cc: [email-masked]
Date: Mon, 11 Sep 2000 09:40:00 -0700 (PDT)

Elizabeth, Jeff forwarded me your questions about capacity options.  I've 
answered them to the extent they involve legal/regulatory issues.  If you 
need anything further please don't hesitate to call.

?  Can a new shipper who enters into an FTS-1 contract with zero MDQ in order 
to purchase a shipper call option or sell a transporter put option be 
allowed, prior to the exercise date, to transfer the underlying option rights 
by permanently releasing this contract?    YES.

?   Will we be required to report these contracts with zero MDQ on the Index 
of Customers and/or the Transactional Report?  YES.

? Can the releasing shipper permanently release a portion of his existing MDQ 
and choose to keep or transfer the option rights?   YES.  The shipper could 
even release all of its MDQ (reducing it to zero) and keep its option rights.

? How is it determined whether a contract with an option amendment is within 
the min/max tariff rate or needs to be filed as a negotiated rate?  The 
option fee is converted to a per-Dth, per day rate and added to the transport 
rate.  If the total exceeds the maximum tariff rate, it's "negotiated".  
Otherwise, our position is that it's not negotiated.  We are not 100% 
positive that FERC will agree with us on this issue.