Lorna,
Sources close to Kern River confirmed with me just yesterday that the 
original expansion (124,500 MMBtu/d) is being contracted principally by one 
party, PG&E National Energy Group, for their La Paloma Power Project outside 
of Bakersfield, California.  I'm assuming that additional support for a 2nd 
KRGT expansion will come from other developers interested in securing gas 
supply.  

It's important to remember the economics here --- Kern River's pipeline 
originates in Wyoming (Rockies gas) and delivers directly into Southern 
California.  Their gas generally clears the market at the Southern California 
Border index.  Consequently, there is no stacking of rates as would be the 
case if TW or EPNG attempted to deliver their gas through Mojave to the same 
markets.  I've attached the recent press release regarding the La Paloma 
project for your information...


PG&E CORPORATION UNIT BEGINS CONSTRUCTION OF 
CALIFORNIA'S LARGEST +GREENFIELD, MERCHANT POWER PLANT
La Paloma Facility Will Fill a Critical Need for New Electricity Supplies in 
California

San Francisco ) Welcoming the opportunity to provide competitive electricity 
to meet the growing electricity needs of California, PG&E Corporation 
(NYSE:PCG) announced today that its National Energy Group has begun 
construction on the La Paloma Generating Plant. La Paloma is a 1,048-megawatt
, natural gas-fueled combined-cycle facility. The plant is expected to begin 
operating in the summer of 2001.  PG&E National Energy Group President & CEO 
Tom Boren said, "The construction of the La Paloma facility is an important 
step in meeting the growing demand for electricity in the state. We welcome 
the opportunity to further the growth of customer choice in California's 
evolving competitive power market." 

The California Independent System Operator (ISO), a non-profit public benefit 
corporation responsible for maintaining transmission reliability and ensuring 
adequate electricity supplies, hailed La Paloma as a welcome addition. "As 
North America,s only regional transmission operator relying on competitive 
market forces to maintain the critical balance between electricity supply and 
demand for California,s 27 million electric customers, the California ISO is 
very pleased that PG&E,s National Energy Group has stepped forward with the 
La Paloma facility to fill an essential consumer need," said Cal ISO 
President & CEO Terry Winter. "This investment shows that the market is 
responding to the growing demand for electricity."
"As a highly efficient plant from both an energy and environmental 
standpoint, California consumers will benefit," added PG&E Corp.'s Boren. 
"The La Paloma Generating Plant provides highly competitive costs with a 
minimum of energy consumption and environmental impacts."

The La Paloma plant site is approximately 40 miles west of Bakersfield, 
Calif. in western Kern County on an industrial site previously used for oil 
production. When completed, it will be the state,s largest facility designed 
from the ground up exclusively as a merchant power plant. A merchant plant 
sells its electrical output to wholesale customers in a regional competitive 
bulk power market. Those wholesale customers, which include traditional 
utilities, municipal utility districts, retail energy services companies, 
wholesale power marketers, and electric cooperatives, in turn arrange to have 
the electricity delivered to retail consumers.

The La Paloma development team has selected ABB ALSTOM POWER Inc. as the 
turnkey contractor for the project. ABB ALSTOM POWER is responsible for the 
design and engineering work, the procurement of equipment and management of 
sub-contractors, and the actual construction of the facility. The La Paloma 
Generating Project received its California Energy Commission approval in 
October 1999, and the financing package for the project is being completed 
now.

"The rigorous permitting process really laid the ground for an outstanding 
construction program," said Roger Garratt, project development manager for 
PG&E Corporation,s generating unit. "We look forward to making a major 
contribution to the Kern County economy in a manner that is completely 
compatible with the area's sensitive ecosystem." Garratt noted the project's 
plan to permanently set aside conservation land as part of its environmental 
mitigation program.





Market Intelligence - Enron Transportation Services
From: Lorna Brennan on 11/29/2000 09:49 AM
To: Courtney Barker/ET&S/Enron@Enron, John Goodpasture/OTS/Enron@ENRON, 
Michael Ratner/OTS/Enron@Enron, Sebastian Corbacho/ET&S/Enron@Enron, Yuan 
Tian/ET&S/Enron@ENRON, Mike McGowan/ET&S/Enron@ENRON, Rockey 
Storie/ET&S/Enron@ENRON, Kent Miller/ET&S/Enron@ENRON, John 
Dushinske/ET&S/Enron@ENRON, Dave Neubauer/ET&S/Enron@ENRON, Bill 
Fowler/ET&S/Enron@Enron, Steven Harris/ET&S/Enron@ENRON, Jeffery 
Fawcett/ET&S/Enron@ENRON, Lorraine Lindberg/ET&S/Enron@ENRON, Kevin 
Hyatt/ET&S/Enron@Enron, Christine Stokes/ET&S/Enron@ENRON, TK 
Lohman/ET&S/Enron@ENRON, Michelle Lokay/ET&S/Enron@Enron, Lindy 
Donoho/ET&S/Enron@ENRON, Lee Huber/ET&S/Enron@ENRON, Susan 
Scott/ET&S/Enron@ENRON
cc:  
Subject: Kern River to Do Another Open Season

Open Season Expected for Kern River Capacity 

After the recent successful completion of an open season on an added 124,5000 
Dth/d of firm transportation capacity into California along its 922-mile 
interstate pipeline, Williams' subsidiary Kern River Gas Transmission will 
announce another open season this week, perhaps as early as today for 
additional new capacity on the pipeline carrying Rocky Mountain supplies from 
southwest Wyoming, a Salt Lake City-based Kern River spokesperson said 
Tuesday. 

Although the spokesperson indicated the current 700 MMcf/d-capacity pipeline 
is running full these days, Kern River has no plans to re-open its previous 
proposals to build transmission laterals within California, heading north and 
south into major industrial areas of the state. The growing supplies, which 
are expected to come into the state to fuel the accelerating demand for new 
natural gas-fired electric generation plants, will be fulfilled by adding 
compression and looping, the spokesperson said. 

Kern River is planning on bringing "a lot more volumes" into California in 
the years ahead, said the spokesperson, noting that the recent capacity 
expansion will be made possible by an $80 million project to add three new 
compressor stations, additional compression at an existing Wyoming station, 
restage a compressor in Utah and upgrade two meter stations. The new open 
season is expected to run for two months through the end of January for 
marketers, merchant generators, large industrial plants and utilities along 
the pipeline route in Utah, Nevada and California, all of which have been 
experiencing tremendous energy load growth. The bulk of the interest is still 
expected to come from California, the spokesperson said.