This morning I raised a concern regarding TW's sale of excess fuel at 
downstream points.  Here's the problem:  the tariff requires shippers to 
tender fuel to us at their receipt points.  With rare exceptions, those 
receipt points are not at the Cal. border.  Order 636 mandates that pipelines 
unbundle transportation from storage.  It also requires that pipelines that 
make gas sales do so at the furthest upstream point on their pipeline.  That 
latter requirement means that if a pipe buys gas at point "x", it should 
resell the gas at point "x" and not haul the gas to point "y" and then sell 
it there as a delivered (i.e., bundled) product.  My concern this morning was 
that our receipt of fuel gas in the San Juan or Permian and shipment of that 
gas to the Cal. border for sale arguably violates the unbundling requirement 
(because the Cal. border sale is a bundled combination of the sale and the 
transportation of the gas to the downstream location) or the "furthest 
upstream point" requirement or both.  Susan and my recollection was that when 
ECS wanted to receive the Gallup fuel deliveries at  a point other than 
Permian pool, we made them sign a transport contract to move the gas to where 
they wanted it.  I haven't confirmed that recollection but I am recalling 
that we told Courtney that we couldn't just move our fuel gas around 
whereever we wanted it--we needed someone to pay us to transport it.

Irrespective of what we did with ECS, I think the following is the correct 
way to look at this situation:  We receive fuel at the shippers' receipt 
points.  Once we receive it, however, it is no longer "fuel."  It becomes 
line pack until it is burned.   Line pack moves around based on a lot of 
reasons, including shipper imbalances, etc.  It also, obviously, has to move 
to the compressors where it is burned as fuel.   It is our job to  manage 
line pack, and that means we buy line pack at locations where we are short, 
and sell it at locations where we are long.  If we end up long at the Cal. 
border from time to time, we should sell excess line pack to get line pack 
back to optimal levels.  I wouldn't want to get into a pattern where we are 
consistently buying line pack in the San Juan and Permian and selling line 
pack at the Cal. border, but  thats not what we are talking about here.  I 
can't think of anything in the tariff or otherwise that is inconsistent with 
this interpretation of our authority as operator of the pipeline.  MKM--OK 
with you?  DF