Per our conversation at Staff meeting today - please see discussion of look-up capacity below:

 -----Original Message-----
From: 	Smith, Ann  
Sent:	Monday, October 08, 2001 1:48 PM
To:	Corman, Shelley; Fossum, Drew; Harris, Steven; Hartsoe, Joe; Kilmer III, Robert; Kirk, Steve; Miller, Mary Kay; Pavlou, Maria; McCarty, Danny; 'fkelly@gbmdc.com'; 'sstojic@gbmdc.com'; 'rnuschler@akingump.com'; 'cmoore@akingump.com'; Lohman, TK
Cc:	Porter, Gregory J.
Subject:	TW Negotiated Rates  (Message from Greg Porter)



PRIVILEGED AND CONFIDENTIAL
ATTORNEY CLIENT COMMUNICATION

This afternoon we plan to send to Indicated Shippers (IS), Staff, CPUC, Southern California Edison (SCE) and Sempra (are there others?) the conceptual framework for settlement of the disputed proceeding in Docket No. RP97-288 et. al ("framework").  This is the same framework that has already been provided to Staff (prior to the September 30 Oral Argument) and IS (last Thursday, October 4, 2001).  In addition to the framework, we will provide the specific tariff language to implement the process changes contemplated in the framework.  Since we are scheduled to give Judge Leventhal a settlement status report tomorrow, it seems best to proceed with distribution of the specific tariff language to all parties at this time.  

The specific changes set forth in the tariff sheets (e.g., separation of capacity allocation procedures from ROFR, removal of certain discretion) seem to be the easy items for TW to include in a settlement.  They are relatively "painless" offers that are easy for us to agree to.  Although these items may go a long way towards settlement, they likely will not be sufficient to get such parties as the IS  and CPUC fully on board.  Accordingly, we need to all give thought to other items that we could offer down the road to achieve a unanimous settlement.  We need to be creative.  A couple concepts that have been advanced internally so far are:

Max. rate cap moratorium for operational capacity (adavantage: may provide CPUC  enough until they pursue their larger industry policy objective).
EBB sytem that allows a shipper interested in capacity to simply enter a receipt and delivery point; the system will automatically let the interested shipper know how much, if any, capacity is available (advantage: although it doesn't provide the IS's the "last look" auction their looking for, it at least provides an open process for anybody that is interested to find out if capacity is available (eliminates any claim of "tortious process"); disadvantage: feasibility and cost are unknown at this time).
Other suggestions?  We need to consider all ideas that will address in part the:
	1.  IS's desire to have all capacity bids posted and subject to review and further bidding; and
	2.  CPUC's perception that negotiated deals above max rates are not in the consumers interest.

We may ultimately not be able to get a settlement, however, we should weigh the cost and benefits of doing so.  At this point we need to consider possible items that could be offered in settlement.  We will not offer anything additional until we find out more specifically the parties reaction to the framework and TW's specific tariff changes.  We won't know where we are until we get this important feedback.  Nonetheless, especially in light of the short time schedule, we should give specific trade-offs consideration now.  

Please let me know what thoughts or feedback you have.  

Thanks.  Greg