Jeff,
Sorry I've been hard to get a hold of... we held a workshop today to talk 
about our proposed Transport Options program.  I found a copy of what I'd 
sent to you before.  I'll stand behind these numbers today as representing 
the dollar value of the risk Transwestern faced in the proceeding.  What's 
not clear from my original note is that these cost impacts were annual, and 
such impacts would continue year to year thereafter until 
conditions/circumstances changed.  I hope this is useful.


---------------------- Forwarded by Jeffery Fawcett/ET&S/Enron on 08/31/2000 
05:25 PM ---------------------------


Jeffery Fawcett
03/06/2000 04:40 PM
To: Jeff Dasovich/SFO/EES@EES
cc:  

Subject: GIR proceeding-- Potential Financial Impact to TW

Jeff,
You asked me to try to quantify the impact of Transwestern losing access 
rights to 200 MMcf/d of capacity at SoCal Needles as part of the GIR 
proceeding.  Unfortunately, it's not a precise science inasmuch as it depends 
on the shippers' reaction and/or retaliation to such circumstances.  As a 
baseline, Transwestern is almost fully subscribed under various term length 
contracts (and has been since 1998) to the California Border, including the 
750 MMcf/d of capacity available at SoCal Needles.  

In concept, under SFV rates, the majority of revenues would otherwise be 
realized by TW, notwithstanding the circumstance of TW shippers being denied 
full access to their primary delivery point.  In this "best case," the loss 
to TW would be the commodity rates (theoretically, a wash, since they 
presumably represent the true variable cost of TW providing the service), and 
the revenue benefit associated with the fuel margin, calculated to be $5.8MM.

If TW shippers took the position that TW was responsible, and therefore, 
accountable for their inability to consumate a portion of their transactions 
into SoCal Gas' system, then TW faces a "more onerous case" in which it loses 
the demand charge component of their contracts calculated to be $16.5MM.  
Coupled with the aforementioned fuel margin, the total loss is $22.3MM. 

In the worst case, in addition to the actual damages or costs to TW's 
shippers described above, TW shippers may face performance penalties or other 
contractual damages involving their commodity sales to customers behind SoCal 
Gas.  Therfore, TW shippers may attempt to extract those same penalties and 
costs from TW.

Realistically, I'd say that TW faces a loss somewhere between the best case 
and the more onerous case, maybe in the $12 - $15MM range.

I hope this information is useful for purposes of your analysis.  Let me know 
if I can be of any further assistance.