Lindy, FERC has consistently held that pipelines may make "operational" sales 
of gas.  Specifically this has included occasional sales of gas resulting 
from cashout requirements and the buying and selling of gas to maintain 
linepack levels.  TW's sale of excess linepack gas would probably be fine.  
By contrast, buying gas then turning around and reselling it would be suspect 
as it would look too much like our unbundled merchant function.

Let me know if you have further questions.






Lindy Donoho
09/20/2000 04:43 PM
To: Steven Harris/ET&S/Enron@ENRON, Susan Scott/ET&S/Enron@ENRON
cc:  

Subject: TW Buy/Sell Gas For Operations

In our Plan meeting, we were discussing UAF and Operation's objective to 
reduce it.  Operation's objective is a volumetric goal, but we are at risk 
for the gas price.  It started me thinking about our whole fuel expense.  
TW's fuel expense is valued on our books at the TW systemwide index.  Should 
TW be hedging the fuel that we burn?  Jan-Aug, 2000 (acctg months) Y-T-D fuel 
expense is at $21MM ($2.6MM/month) at a total volume of 6.7 Bcf.  This 
summer, with high gas prices and Gallup in service, our fuel has been ranging 
$3.4-3.8MM a month.  Operations has objectives to minimize the fuel use, but 
not the price.
  
How could we hedge our fuel used?  Would we sell all the fuel retained (hedge 
it as high as possible) and manage our fuel expense separately through its 
own purchasing and hedging (as low as possible) effort?  Could we have hedged 
some portion of our fuel usage last year for this year at $2.36 (like we 
hedged our excess fuel) and not be subject to the high prices we're seeing 
this summer?

Do you think there is an opportunity here to manage our fuel expense more 
effectively?

Susan,
I think you had looked at TW's ability to buy/sell gas a few months back 
(when we were looking at fuel monetization).  What did the FERC Order say 
about under what circumstances TW could buy/sell gas?