Folks -- 

Had a good discussion with a Senior Staff member at FERC in preparation for 
the Pipelines Outreach meeting next week.  He told me that the two issues on 
the gas side that are of primary concern to the Commission are 1) Marketing 
Affiliates and potential abuse on the pipelines (Think El Paso); and 2) the 
failure of CFTC and/or SEC to more closely oversee derivative trading. 

Apparently, staff is considering whether to ban all transactions by marketers 
on an affiliated pipeline, and some form of filing/reporting requirement to 
better understand the derivative market.  Due to a lack of information, some 
at FERC are assuming the worst.    

I believe these proposals are in the formative stage and have not been 
presented to Senior Staff or Commissioners as a recommendation.  I think 
Staff would appreciate some information (ammo) to refute the need to further 
regulate marketing affiliates or delve into derivative trading.

INGAA filed comments and a study concerning Marketers' use of affiliated 
pipelines in response to the Marketing Affiliate Conference at FERC.  These 
are attached.   Staff questions whether the underlying information remains 
accurate.  We are considering whether to update the underlying information 
used in the INGAA Study and how best to address these issues (probably during 
Q&As) during the Staff Outreach.

I believe it would be helpful to put back together the coalition that Leslie 
Lawner used at the last Market Affiliate conference to request a meeting as 
part of the current Staff Outreach to discuss Staff's concerns.  In addition, 
I think it would be helpful to request a separate ENRON meeting with Staff to 
discuss how the derivative market works and why FERC does not need to 
establish ongoing reporting requirements or otherwise become involved in 
these markets.  Unfortunately, in this meeting we would probably be asked 
about our involvement in the El Paso Merchant Transportation deal into 
California, in light of Peggy Hegg's comment on the Frontline Show that El 
Paso hedged some of the risk with Enron.  

We can discuss further on Friday's call.  Later Joe