FYI.  This is receiving close scrutiny by the Commission.  RA

---------------------- Forwarded by Ray Alvarez/NA/Enron on 07/26/2001 05:59 
PM ---------------------------


Nancy Bagot
07/26/2001 05:54 PM
To: Ray Alvarez/NA/Enron@ENRON
cc:  

Subject: TW neg. rate order summary

(1) Transwestern Negotiated Rates proceeding, RP97-288 et al.:  The order 
calls for an expedited hearing to explore four primary issues (listed 
below).  The draft order passed at the meeting by a vote of 5 ) 0, and 
language on revisions to TW's tariff and posting policy were added to the 
final order to assuage concerns expressed in the discussion of the case at 
the meeting.  

The case was called for public discussion by Commissioner Breathitt, who 
wanted to highlight that the additional &limited scope8 fast track hearing  
is the &right way to go8 to understand why negotiated rates that were seventy 
times the maximum recourse rate are just and reasonable.  Breathitt,s 
additional question in this case is why shippers would agree to such rates 
when lower rates were available.

In the final order, Breathitt,s concerns about the posting of the operational 
capacity as such were reflected in language ordering TW to revise its tariff 
and web postings to provide clear identification of operational capacity and 
to post and contract such capacity on each day of its availability (i.e., on 
a day-to-day basis) unless it can demonstrate that operational capacity will 
be available for some longer period of time.

At Wednesday,s meeting, Wood noted that &we bumped into something here,8 
though he did not mention possibilities but instead agreed that a procedural 
schedule to &vet the issues in the light of day8 was the best route.   The 
four issues set for hearing are:  
  ? whether the transportation capacity was advertised and awarded in an 
accurate and fair    manner consistent with Transwestern,s tariff; 
  ? whether the transportation rates(were the product of an exercise of 
market power (i.e., did    TW withhold capacity that otherwise could have 
been made available under recourse service    in order to make the capacity 
available under negotiated rate charges at substantially higher    rates); 
  ? why the shippers agreed to these rates when significantly lower recourse 
rates should have    been available under our negotiated rate program; and 
  ? why the awarded capacity appears to be available without interruption 
while firm     transportation service under Transwestern,s recourse rate was 
not.