Jeff - we participated in this open season and hold capacity in our name. We 
will also take assignement of capacity from several shippers.

Please call if you have any questions.


From: Jeff Dasovich on 04/09/2001 10:18 AM CDT
Sent by: Jeff Dasovich
To: Julie A Gomez/HOU/ECT@ECT, Stephanie Miller/Corp/Enron@ENRON, Christopher 
F Calger/PDX/ECT@ECT, Tim Belden/HOU/ECT@ECT, Richard Shapiro/NA/Enron@Enron, 
James D Steffes/NA/Enron@Enron, skean@enron.com, Susan J Mara/NA/Enron@ENRON, 
Sandra McCubbin/NA/Enron@Enron, Harry Kingerski/NA/Enron@Enron, Joe 
Hartsoe/Corp/Enron@ENRON, Sarah Novosel/Corp/Enron@ENRON, Donna 
Fulton/Corp/Enron@ENRON, Tom Briggs/NA/Enron@Enron, Leslie 
Lawner/NA/Enron@Enron, Rebecca W Cantrell/HOU/ECT@ECT
cc:  

Subject: FERC ruling on Kern expansion


Kern Gets Speedy OK; Breathitt Questions Action 
FERC moved with record speed to issue a certificate last week to Kern River 
Gas Transmission for its 135 MMcf/d, mostly compression, expansion to the 
natural gas-starved California market, but not all of the commissioners were 
happy with the expedited manner in which the project was approved. 
"The speed with which the Commission has acted in this proceeding is 
something which will no doubt be touted as a great effort," but the 
"precedent we have created could be a double-edged sword," warned 
Commissioner Linda Breathitt in a partial dissent of the decision. Although 
she voted in favor of the certificate in the end, she questioned whether FERC 
"should...be willing to sacrifice careful review for speedy action." 
Breathitt further said she seriously doubted the so-called California Action 
expansion of the 900-mile,Wyoming-to-California Kern River system merited the 
"extraordinary regulatory treatment" that the Commission gave it. Critics 
claim that the $81 million project will not flow any more gas to the Wheeler 
Ridge Interconnection in California than is currently available there, she 
noted, adding that it would simply displace existing gas. 
"...[I]t will not necessarily result in any net increase of natural gas in 
the California marketplace. This makes it difficult to understand just how 
our approval of Kern River's proposal is going to assist in increasing 
electric generation in California this summer," Breathitt said. If anything, 
she noted the project could make the congestion problem at Wheeler Ridge even 
worse than it is. 
There should have been a "fuller airing of this issue" at FERC before the 
project was certificated, she noted. "It would be counterproductive for this 
Commission to act precipitously on projects related to California without 
ensuring that they will, in reality, benefit specific markets --- and more 
importantly, that they will cause no further harm." 
The Commission majority, however, readily dismissed protests of Pacific Gas 
and Electric (PG&E), Southern California Gas and other California customers, 
that claim the Kern River expansion would degrade service to existing 
customers. They requested that existing customers be given priority over 
expansion shippers. 
"We conclude that the California Action Project will not have undue negative 
impacts on existing shippers or competing pripelines," the order said 
[CP01-106. For starters, "the record does not show that pro-rata allocations 
of primary firm capacity have been a problem at Wheeler Ridge." Kern River 
reports that the aggregate primary firm delivery rights of its shippers at 
Wheeler Ridge will increase to about 527 MMcf/d from 450 MMcf/d as a result 
of this project. At the same time, the design delivery capacity at the 
Wheeler Ridge Meter Station will be increased to about 800 MMcf/d from 598 
MMcf/d to accommodate existing shippers, new expansion shippers and Mojave 
Pipeline shippers, it noted. 
"Therefore, the expanded delivery point capacity at Wheeler Ridge will be 
greater than the sum of the combined Kern River and Mojave contract volumes. 
The Commission recognizes that this does not factor in the volumes 
attributable to both PG&E and local production that are also delivered to 
Wheeler Ridge. However, our emphasis is on Kern River being able to provide 
sufficient delivery point capacity for its customers," the order said. 
"The solution to the problem of pro-rata allocations of any services at 
Wheeler Ridge lies not with the interstate pipelines, but rather in fixing 
the problem with the take-away capacity and the lack of firm transportation 
path rights on SoCalGas, a matter which is beyond our jurisdiction." 
The project would increase the "limited-term, incremental transportation 
capacity" of Kern River by 135 MMcf/d from Wyoming to California to help 
address the urgent need for additional gas in the West. An estimated 53,900 
horsepower would be added to the pipeline, including three new compressor 
stations, and upgraded facilities at three existing compressor stations and 
an existing meter station. The project, which has been fully subscribed, has 
a targeted in-service date of July 1 of this year. 
Kern River plans to use a mix of permanent and temporary facilities on the 
project, with the temporary facilities intended to be subsequently replaced 
by permanent 2002 California Expansion Project facilities (which is pending 
at FERC), and the permanent facilities to be incorporated into the design of 
the pipeline's 2002 and 2003 California Expansion Projects. The 2003 project 
recently went through an open season