I've discussed the "actual fuel" provision with Christine and Bob and made 
them aware that this is a nonconforming provision that would need to be 
filed, since the FTS-1 rate schedule provides that fuel payments are to be 
made according to the percentages set forth in the rate sheets.  

According to Bob's calculations, the actual fuel used by Duke under this 
contract is likely to exceed the applicable percentages in our tariff.

I don't think FERC or any of our shippers would have any immediate objection 
to our charging actual fuel.  However, I know that fuel is a sensitive issue 
on TW so I wanted to be sure to draw your attention to this provision.  Let 
me know what you think.

---------------------- Forwarded by Susan Scott/ET&S/Enron on 09/12/2000 
02:02 PM ---------------------------


Christine Stokes
09/12/2000 02:00 PM
To: Bob Burleson/ET&S/Enron@ENRON, Steven Harris/ET&S/Enron@ENRON, Mary Kay 
Miller/ET&S/Enron@ENRON, Mary Darveaux/ET&S/Enron@ENRON, Glen 
Hass/ET&S/Enron@ENRON, Drew Fossum/ET&S/Enron@ENRON
cc: Susan Scott/ET&S/Enron@ENRON, Kevin Hyatt/ET&S/Enron@Enron 

Subject: Duke Contract Approval Request

TRANSWESTERN PIPELINE COMPANY
CONTRACT APPROVAL FORM


Please review the attached non-standard discount letter to Duke Energy 
Trading & Marketing (DUKE) and the associated letter from Transwestern to 
Duke which outlines the conditions of Transwestern's Contribution in Aid of 
Construction (CIAC) payment to Duke for certain facility upgrades.

Transwestern shall pay Duke $750,000 for Duke facility upgrades in order to 
increase gas receipts into Transwestern from Duke's Artesia plant and Big 
Eddy gathering system by an incremental 20,000 Dth/d.  Duke shall 
subsequently subscribe to a five year transportation contract for 20,000 
Dth/d of East of Thoreau  (EOT) capacity at a $.05/Dth/d one-part rate 
effective November 1, 2000.  Duke shall be charged ACTUAL fuel, currently 
calculated as 1.5% (compared to EOT Tariff fuel rate of 1.31%), for any 
transportation within Transwestern's EOT Area.  Duke has also been granted 
the ability to flow to California on an alternate basis at a total rate of 
$.09/Dth/d plus applicable Tariff fuel (currently 5%).

Please indicate approval via REPLY WITH HISTORY.  Please contact me at x5702 
if any questions arise.