Susan -- Here is the article on market Affiliate issues.  Later Joe
----- Forwarded by Joe Hartsoe/Corp/Enron on 07/19/2001 05:11 PM -----


	Shelley Corman/ENRON@enronXgate 07/19/2001 04:16 PM 	   To: Joe Hartsoe/Corp/Enron@ENRON, Stanley Horton/ENRON@enronXgate, Danny McCarty/ET&S/Enron@Enron, Mary Kay Miller/ET&S/Enron@ENRON, Drew Fossum/ENRON@enronXgate, Robert Kilmer/ENRON@enronXgate  cc:   Subject: Dow Jones Article: FERC Agenda Eyes Tightening Of Pipeline Affiliate Rules	


FERC Agenda Eyes Tightening Of Pipeline Affiliate Rules
By Bryan Lee

07/19/2001
Dow Jones Energy Service 
(Copyright (c) 2001, Dow Jones & Company, Inc.) 

OF DOW JONES NEWSWIRES 

WASHINGTON -(Dow Jones)- Federal energy regulators are scheduled to act next week on new rules affecting natural gas pipeline affiliate dealings.
Sources say the U.S. Federal Energy Regulatory Commission is debating action at next Wednesday's open meeting to tighten up rules prohibiting pipelines from providing market-sensitive information to marketing affiliates. 
FERC rules allow monopoly pipeline companies to market natural gas in competitive markets providing they adopt codes of conduct that prevent the passing of information that provides a competitive advantage to their gas-marketing affiliates. 
Similar rules are in place on the electric side for vertically integrated utilities with marketing units competing in wholesale power markets. 
The changes under consideration stem from the commission's investigation of El Paso Natural Gas Co.'s (EPG) controversial contract with a marketing affiliate for pipeline capacity into California, according to sources. 
The affiliate transaction has been blamed for California's dramatic runup in natural gas prices over the past year, which contributed to the state's unprecedentedly high electricity costs last year. 
The proposed code-of-conduct changes also reflect the sweeping convergence between the natural gas and power sectors in the years since FERC deregulated the pipeline industry in the 1980s. 
FERC's rules prohibit pipelines from sharing market-sensitive information with their gas-marketing affiliates. But the rules don't address the pipeline's power marketing affiliates. The commission is looking to expand the code-of-conduct rules to address all marketing affiliates, sources said. 
These sources say the template for the pending change can be found in the conditions FERC imposed in a 1999 order authorizing the acquisition of Pittsburgh-based Consolidated Natural Gas by Dominion Resources (D). 
The commission approved the electricity-natural gas convergence merger, contingent on Dominion agreeing to adopt codes of conduct applying equally to its gas and power marketing affiliates. 
The planned rule changes would apply to electric utilities with pipeline investments, such as CMS Energy (CMS), Duke Energy (DUK) and American Electric Power Co. (AEP). It is unclear how the changes would affect joint operating agreements, such as the one between Entergy Corp. (ETR) and privately held Koch Industries. 
But the largest impact will be for large pipeline companies with extensive power marketing operations and investments in power plants. 
For example, El Paso, Williams Cos. (WMB) and Enron Corp. (ENE), represent about 70% of the interstate pipeline industry and are among the nation's top power marketers and merchant power plant developers. 
One FERC source described the order scheduled for commission vote next week as "a work in progress," while another said the matter is in such a state of flux that "it might not be safe to write anything yet."