Folks -- 

Had a good discussion with a Senior Staff member at FERC in preparation for the Pipelines Outreach meeting next week.  He told me that the two issues on the gas side that are of primary concern to the Commission are 1) Marketing Affiliates and potential abuse on the pipelines (Think El Paso); and 2) the failure of CFTC and/or SEC to more closely oversee derivative trading. 

Apparently, staff is considering whether to ban all transactions by marketers on an affiliated pipeline, and some form of filing/reporting requirement to better understand the derivative market.  Due to a lack of information, some at FERC are assuming the worst.    

I believe these proposals are in the formative stage and have not been presented to Senior Staff or Commissioners as a recommendation.  I think Staff would appreciate some information (ammo) to refute the need to further regulate marketing affiliates or delve into derivative trading.

INGAA filed comments and a study concerning Marketers' use of affiliated pipelines in response to the Marketing Affiliate Conference at FERC.  These are attached.   Staff questions whether the underlying information remains accurate.  We are considering whether to update the underlying information used in the INGAA Study and how best to address these issues (probably during Q&As) during the Staff Outreach.

I believe it would be helpful to put back together the coalition that Leslie Lawner used at the last Market Affiliate conference to request a meeting as part of the current Staff Outreach to discuss Staff's concerns.  In addition, I think it would be helpful to request a separate ENRON meeting with Staff to discuss how the derivative market works and why FERC does not need to establish ongoing reporting requirements or otherwise become involved in these markets.  Unfortunately, in this meeting we would probably be asked about our involvement in the El Paso Merchant Transportation deal into California, in light of Peggy Hegg's comment on the Frontline Show that El Paso hedged some of the risk with Enron.  

We can discuss further on Friday's call.  Later Joe