I agree that the proposed facilities could be constructed under the prior 
notice provisions of TW's blanket certificate if the cost and environmental 
requirements are met.  The facilities appear to meet the criteria for an 
"eligible facility" under section 157.202(b)(2)(i):  they are necessary to 
provide service to Big Sandy within existing mainline certificate levels, and 
according to my research the facilities are similar to those that the 
Commission routinely has found to be eligible under a blanket certificate.  
The prior notice project cost limit for year 2000 is $20,200,000.  (Sec. 
157.208).  If the project is not within this cost limit we will need to seek 
a 7(c) certificate.  

I've researched the incremental rate question and here's what I've been able 
to find out:

In the context of a 7(c) application, FERC generally requires use of existing 
Part 284 rates.  This was the case when TW applied for a certificate to 
construct the San Juan lateral.  TW requested a separate zone rate for the 
lateral in that proceeding but FERC stated that a section 7 proceeding was 
not the appropriate forum.  The Commission stated, however, that it would be 
willing to entertain an abbreviated Section 4 filing by TW to revise its Part 
284 rates to inclue zone rates for the lateral.  So TW made a Section 4 
filing and got zone rates approved based on the cost of service for the 
lateral. 

Whether we construct the Big Sandy lateral under the blanket certificate or 
not, it appears that we would have to file a limited section 4 if we want to 
implement rates for the lateral that are different from the West of Thoreau 
rates.

As for whether an open season would be required, I assume it would not be if 
Caithness is going to fully subscribe the capacity on the lateral.  However, 
if other shippers are interested and we want to get the best rate we'll 
probably want to have an open season.  In any event, in the context of a 7(c) 
application FERC is going to put us at risk for recovery of costs, so it 
would be to our advantage to sell 100% of the new capacity.

At this point I am uncertain whether we even want or need different rates for 
the Big Sandy lateral...ultimately it will depend on the cost of the project 
and what rates would make it economic for TW to proceed.

I hope this helps...if there are further questions or if any of this does not 
sound right to you let me know.   



   Michele Winckowski                08/17/2000 01:39 PM

To: Drew Fossum/ET&S/Enron@ENRON, Mary Kay Miller/ET&S/Enron@Enron, Maria 
Pavlou/ET&S/Enron@ENRON, Dari Dornan/ET&S/Enron@Enron, Glen 
Hass/ET&S/Enron@Enron
cc: Keith Petersen/ET&S/Enron@ENRON, Jeffery Fawcett/ET&S/Enron@ENRON, Susan 
Scott/ET&S/Enron@ENRON 

Subject: Re: Caithness Big Sandy, LLC. Project  

As you are aware, Transwestern is working with a shipper to potentially 
provide service to a new power plant located approximately 40 miles off the 
mainline in Arizona.  Although, the final negotiation are not complete 
certain options are being evaluated, I need some assistance in interpreting 
the regulations regarding the authority we should use for approval of this 
project.  

The facilities that would be constructed include a delivery point and 
approximately 40 miles of pipe.  As these facilities are non-mainline, it may 
be possible to construct the proposed facilities under the prior notice 
provisions of TW's blanket certificate, provided the project satisfies the 
blanket criteria (generally costs and environmental).

With this in mind, I have the following issues and questions:

Preliminarily, marketing is thinking that we may want to develop an 
incremental rate  to recover the cost of the project.

Would a new incremental rate for this service impact our ability to file for 
approval under the prior notice provisions?  Note: Generally, Subpart F of 
Part 157 (blanket regulations) does not address service issues as 
transportation service is provided under Part 284 of the Commission's 
regulations.  However, the regulations (o157.204)  set forth Who may apply 
for a blanket certificate.   The criteria includes, among other things, any 
interstate pipeline that has rates accepted by the Commission.  Therefore, 
would an incremental rate have to be approved by the Commission before the 
proposed facilities would be blanket eligible?

Can a new incremental rate be established through a limit-section 4 rate 
filing or is a case-specific certificate required?

As the facilities will not include any mainline expansion - Is an open season 
required for the project?  My opinion is "NO".  Do you agree?

Your thoughts and assistance in this matter would be greatly appreciated.  
Thanks MW