pls print.  thanks df
---------------------- Forwarded by Drew Fossum/ET&S/Enron on 01/25/2001 
04:48 PM ---------------------------


Susan Scott
01/24/2001 11:12 AM
To: Paul Cherry/GPGFIN/Enron@ENRON
cc: Steven Harris/ET&S/Enron@ENRON, Drew Fossum@ENRON, Shelley Corman, Lee 
Huber/ET&S/Enron@ENRON 

Subject: Re: PG & E Capacity  

Paul, as we discussed on the phone, here are my conclusions on the 
terminability of our firm contracts with PG&E.  I believe Drew and Shelley 
concur (and they are welcome to add their comments, of course).  

If PG&E fails to comply with our request for assurance of creditworthiness, 
the "Termination" provisions of Section 16.1(b) of our General Terms and 
Conditions will be triggered.  If PG&E fails to perform any obligation under 
a service agreement, TW may terminate the agreement under the following 
procedure:  1) TW serves written notice on PG&E that it is in default, and 
that TW intends to terminate the agreement, 2) PG&E gets 30 days to remedy 
the default, 3) if PG&E does not remedy the default within 30 days, the 
agreement shall become null and void, after we obtain the requisite 
regulatory approvals, which Shelley advises me would include obtaining 
abandonment authority from FERC.  
 
The Bankruptcy Code provides that a utility may not alter, refuse or 
discontinue service to a debtor solely because of commencement of a 
bankruptcy action or because a debt owed by the bankruptcy debtor was not 
paid when due.  However, the utility may alter, refuse or discontinue service 
if neither the trustee nor the debtor, within 20 days after the date of an 
order for relief, furnished adequate assurance of payment for service after 
such date.  I am not a bankruptcy expert, but my point is simply that our 
rights may change once a bankruptcy action is filed.  Let's hope that our 30 
days runs before PG&E goes to Bankruptcy Court.  FERC has held that 
termination of service cannot be inconsistent with federal bankruptcy law:  
see El Paso Natural Gas Company, 61 FERC P61,302 (1992) (involving El Paso 
Electric bankruptcy).

As far as whether there could be a temporary release of PG&E's capacity, our 
tariff does not contain any provision under which we could compel any shipper 
to release its capacity.  PG&E certainly has the ability to release its 
capacity, but it does not sound as if they would want to without some 
incentive.

If there are any other questions give me a call (or Drew or Shelley).



   
	
	
	From:  Paul Cherry                           01/24/2001 10:50 AM
	

To: Susan Scott/ET&S/Enron@ENRON
cc:  

Subject: Re: PG & E Capacity

 Per our conversation.

 Thanks
---------------------- Forwarded by Paul Cherry/GPGFIN/Enron on 01/24/2001 
08:49 AM ---------------------------


Steven Harris
01/23/2001 01:19 PM
To: Paul Cherry/GPGFIN/Enron@ENRON
cc:  

Subject: Re: PG & E Capacity  

I am not sure I exactly understand your question. It is possible for us to 
sell the space if PG&E were to release it. However, I am sure PG&E has no 
intention of letting it go as they need it for their core supplies. Also, 
since the market value of the space is greater than what they pay us it would 
cost them more money in the long run to get rid of it and have to buy/ ship 
supplies under some other supply arrangement. For an answer to any legal 
rights they have Susan Scott would be the best one to answer that. 
Thanks.     


   
	
	
	From:  Paul Cherry                           01/23/2001 12:48 PM
	

To: Steven Harris/ET&S/Enron@ENRON
cc:  

Subject: PG & E Capacity

 Steve,

 The question has been brought up in regard to the capacity that PG&E holds 
and it's marketability, in the event that PG &E defaults and goes into 
bankruptcy.  Could a preauthorized temporary release of this capacity be 
considered where performance would continue, while PG & E would retain it's 
liability under the Firm Contracts?


 Thanks and Regards.