Gerald -- here are a couple of suggested wording changes (should appear in 
blue)

 1.  FERC was made aware of the Compression Services arrangement with ECS (at 
that time via Enron Capital & Trade Resources Corp.) in the filings for the 
certification of the Kachina units.  FERC simply didn't ask any further 
questions in that proceeding.  The Operation & Maintenance Agreements in 
place for the Kachina units essentially accomplishes the same things as the 
Operational Control Agreement in Gallup.  TW feels the O&M agreements would 
be adequate to address any concerns about TW's regulatory responsibility over 
the compressor facilities.  The Operational Control agreement was put into 
place in Gallup because it was thought to be easier to give FERC exactly what 
is was looking for rather than show them the Gallup O&M Agreement which might 
unnecessarily complicate the process at that time.

 2.  There is no basis in FERC Regs or the NGA for FERC to impose any type of 
penalty or discontinue the Compression Service's due to TW's operation of 
Kachina without the Operational Control Agreement.  No regs or law address 
this situation.  Again this is tempered by the fact that FERC was made aware 
of the arrangement and didn't ask any questions and the O&M agreement is in 
place to accomplish control for TW.

 3.  I also faxed you a copy of Section 19(c) of the NGA which indicates that 
the petition for rehearing does not effect the status of the certificate.  
Construction is moving ahead and the anticipated start date is May 1.  

I will forward the filing TW made wrt to the Operational Control Agreement as 
soon as I recieve it.  Let me know if you have any further questions (713) 
853-3512. 




Gerald Nemec@ECT
03/23/2000 11:47 AM
To: Susan Scott/ET&S/Enron@ENRON
cc:  

Subject: FERC Issues

Susan, Attached is the text I am forwarding to the investors.  Please let me 
know if you have any comments.  Thanks for your help.


I talked further with Transwestern Counsel today concerning the issues and 
have the following points;

 1.  FERC was made aware of the Compression Services arrangement with ECS (at 
that time via Enron Capital & Trade Resources Corp.) in the filings for the 
certification of the Kachina units.  FERC simply didn't ask any further 
questions in that proceeding.  The Operation & Maintenance Agreements in 
place for the Kachina units essentially accomplishes the same things as the 
Operational Control Agreement in Gallup.  TW feels the O&M agreements would 
be adequate to answer any questions that possibly FERC might ask regarding 
this subject matter.  The Operational Control agreement was put into place in 
Gallup because it was thought to be easier to give FERC exactly what is was 
looking for rather than show them the Gallup O&M Agreement which might slow 
down the process at that time.

 2.  There is no basis in FERC Regs or the NGA for FERC to impose any type of 
penalty or discontinue the Compression Service's due to TW's operation of 
Kachina without the Operational Control Agreement.  No regs or law address 
this situation.  Again this is tempered by the fact that FERC was made aware 
of the arrangement and didn't ask any questions and the O&M agreement is in 
place to accomplish control for TW.

 3.  I also faxed you a copy of Section 19(c) of the NGA which indicates that 
the petition for rehearing does effect the status of the certificate.  
Construction is moving ahead and the anticipated start date is May 1.  

I will forward the filing TW made wrt to the Operational Control Agreement as 
soon as I recieve it.  Let me know if you have any further questions (713) 
853-3512.