You asked me to research the following question: what is the value at risk to TW if we lower the fuel rate to Sun Devil shippers.  I assumed we would only lower the rate to Phoenix shippers (500,000/day).  If we lower their fuel from 4.75% to 3.75%, based on a $2.50 gas price, the opportunity lost to TW is $4.56mm per annum.  

System wide, once Sun Devil comes in service, every quarter point reduction in TW fuel = $4.6mm in lost revenue assuming a $2.50 gas price.  

Again, system wide once SD comes in service, if we wanted to target an equivalent fuel revenue in 2005 to the fuel revenue before SD in 2003, our required tariff fuel rate would need to be 3.26%.  Remember, we are increasing the total system thruput from 1.2 Bcf/d up to 2.02 Bcf/d AND lowering the overall system fuel consumption.  This has a double positive impact to the fuel calculation.  

So, the point is, we should be willing to negotiate a fuel rate with SD shippers and anything above 3.26% is gravy compared to where we are today.  

Note time of email.  Meeting with STAN in 6 hours, 45 minutes.