Jeff -- since most of Teddy's comments were over my head yesterday, I could 
use your help on that part of the discussion.

***
Transwestern held its Transport Options Workshop on August 31.   Commercial 
and regulatory representatives of BP-Amoco, Burlington, Conoco, Coral, 
Dynegy, Phillips and Reliant attended.  After a brief overview of the 
proposed TW Options filing, we opened the floor for questions and comments.  
Here is a summary of the comments.

Marketing affiliate concerns.  BP's regulatory representative expressed 
concern that TW's marketing affiliates would be able to use options to game 
the system.  For example, since TW and ENA are both Enron companies, if ENA 
buys a call option it is essentially a free option.  ENA could buy a call out 
of the money and we could buy it back from them, with the proceeds going to 
Enron's bottom line.  BP suggested that TW's marketing affiliates be banned 
from purchasing options, or that the marketing affiliate be required to 
credit the call money to other shippers.  BP's concern is that TW's filing 
will set a precedent for other pipelines to offer a similar service, so they 
want TW's options program to be as restricted as possible.  Dynegy reiterated 
its suggestion that the marketing affiliate be required to credit back the 
difference between the option fee paid by the affiliate and the next highest 
bidder's bid, if the affiliate's bid exceeds the next highest bid by a 
certain percentage.  

Our response was that while actual abuse of an options program by a marketing 
affiliate would be a concern, we feel that TW is entitled to a presumption 
that it has complied and will continue to comply with the rules on sale of 
capacity to marketing affiliates.  At this point we are not inclined to 
voluntarily include any limitations on the options program.  If BP and others 
have issues regarding Commission marketing affiliate policy in general, those 
issues should be addressed in a different proceeding that pertain to all 
interstate pipelines.

Right of first refusal.  Burlington asked whether options would replace the 
right of first refusal.  Our response was that ROFR will still be available 
pursuant to the terms and conditions of our tariff.

Negotiated rate.  BP's representative claimed that options will constitute a 
negotiated rate and that each deal will need to be filed as such.  We did not 
respond to this or discuss it further.  However, TW's position at this point 
is that since the option fee is part of the transportation rate, the deals 
will only be negotiated rate deals if the total rate exceeds the maximum 
rate.  

Hoarding capacity.  Several customers expressed concern that the options 
program would make it easier for a shipper to hoard capacity.  It was not 
clear why they thought that options would create more opportunity for 
hoarding than already exists.  Their perception was that options would simply 
make hoarding cheaper and easier.  We acknowledged that the potential for 
withholding capacity from the market is one reason for FERC's current policy 
against reserving capacity for shippers.  Although we did not commit to 
placing any limits on the quantity of capacity for which a shipper may 
purchase an option, it is possible that FERC may require us to do so.

Our plan is to meet with PG&E and SoCalGas in California to elicit their 
comments, and finalize the FERC filing by mid-September.