Kevin,

Steve Harris reported that SW Gas wants to sign up for the remaining 12,400/d of Redrock expansion capacity.  They are talking about 14-15 cents for 10-15 years.  Also, they are interested in capacity expansions to Las Vegas.  This will reduce the Sun Devil capx, which we should include in the economic modeling.  

In progressing discussions with anchor shippers, we should consider some additional rate design features-
Capx/ROE incentives, eg if we build the project for $911 MM, we earn a nominal return, say 9% while if we come in at <$800 MM, we earn 14-15%
Fuel tracker - - - this takes money out of the deal for us but probably makes the pricing more transparent.

 -----Original Message-----
From: 	Hyatt, Kevin  
Sent:	Thursday, November 08, 2001 5:37 PM
To:	Centilli, James; Junus, David
Cc:	Gadd, Eric
Subject:	SFV Rate Design for Sun Devil
Importance:	High


James & David --
	Can the two of you coordinate a revenue model for Sun Devil that incorporates a Straight - Fixed Variable rate design along the following parameters using 15, 20 and 25 year terms:

San Juan utilization: 85% of 780,000/MMBtu/d
Mainline: 85% utilization of 810,000/MMBtu/d
Phoenix lateral: 75% utilization of 500,000 MMBtu/d

Also, prepare some ROE sensitivities if the above utilization falls by 10% and rises by 10%. 

I will be out of town till Tues 11/13.  Can we get together that morning and review your analyses?

page me if you have questions at 888-582-7421

thanks
kh