Koch Gateway has a provision in the Negotiated Rates section of its tariff 
that allows Koch to charge a lump-sum option fee.  Neither the tariff nor the 
FERC order approving the provision describes the option fee in much detail.  
The Commission did require Koch to separately state any option fee 
arrangements when making its negotiated rate filings for deals that include 
option fees.  The Commission also stressed that an option fee annot guarantee 
capacity and therefore does not amount to a request for transportation 
service.

Koch has made three negotiated rate filings involving option fees.  In the 
first such filing, Koch explained that the proposed negotiated rates were 
comprised of two parts:  an option fee and an index-based usage rates.  
Because Koch did not specify the index price formula, the Commission required 
Koch to provide this information.  The Commission also required Koch to 
report the time frame during which the negotiated rate customers could 
exercise their options, so that other shippers could determine whether they 
were similarly situated.