Message-ID: <28259078.1075844256473.JavaMail.evans@thyme>
Date: Thu, 22 Feb 2001 04:36:00 -0800 (PST)
From: rebecca.cantrell@enron.com
To: richard.shapiro@enron.com, james.steffes@enron.com, leslie.lawner@enron.com, 
	harry.kingerski@enron.com, don.black@enron.com, 
	james.shirley@enron.com, jess.hewitt@enron.com, 
	roger.ponce@enron.com, artemio.muniz@enron.com, 
	marianne.castano@enron.com
Subject: El Paso Victory and Opportunity
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Victory:

In a rehearing order issued yesterday in the complaint proceeding on El 
Paso's capacity allocation methodology at Topock, FERC required SoCal Gas to 
share the capacity it was allocated at the SoCal/Topock interconnection on a 
pro rata basis with the replacement shippers to whom it has released capacity 
unless otherwise provided in the release.  ENA currently has about 60,000 
MMBtu/d of released Topock capacity that it acquired from SoCal Gas.  

The initial order in this proceeding required El Paso to reallocate capacity 
among the four interconnects (SoCal, PG&E, Mojave, and Southwest Gas)  that 
make up the Topock delivery point.  El Paso's previous policy aggregated the 
four interconnects for the purpose of contracting for firm deliveries.  
Shippers thus had contractual firm rights to deliver about 1,555 MMcf/d to 
SoCal/Topock, but the physical capacity of the interconnect is only 540 
MMcf/d.  Because the best market prices are at the SoCal/Topock point, 
shippers nominate their full entitlements to SoCal/Topock, resulting in 
continual cuts and uncertainty in the marketplace.  

In compliance with the initial order, each firm shipper made a one-time 
election of the specific Topock point that it desired as a primary delivery 
point.  Not surprisingly, all selected SoCal/Topock, and El Paso then 
allocated primary rights on a pro rata basis.  SoCal Gas was allocated 
489,822 Mcf/d at all the Topock points, but only 202,218 Mcf/d at 
SoCal/Topock.  SoCal Gas then advised ENA and other replacement shippers that 
their capacity would be designated for primary delivery at the Mojave/Topock 
point.  ENA's capacity therefore became significantly less valuable.  

ENA protested El Paso's report to FERC on the allocation process in which it 
provided for the releasing shippers to designate the delivery point 
entitlements of their replacement shippers.  Cook Inlet also requested 
rehearing of the initial order, and  Duke Energy Trading and Marketing filed 
in support of ENA and Cook Inlet.  FERC's order yesterday means that ENA will 
get primary delivery rights at SoCal/Topock for at least a pro rata portion 
of its released capacity.

The revised allocations will be effective April 1, 2001.

Opportunity:

The order also requires El Paso to file, within 30 days, in its Order 637 
proceeding a proposal addressing systemwide capacity allocation issues, 
presumably assigning specific mainline and delivery point capacity rights and 
possible pathing of the entire system.  Parties to the Order 637 proceeding 
will then have 20 days to file comments.

This gives us the opportunity to address the EES problem in Arizona involving 
deliveries (or lack thereof) to customers behind Southwest Gas.