This is one of those to show to Amr to quantify.

Jim

 -----Original Message-----
From: 	Cantrell, Rebecca W.  
Sent:	Wednesday, July 25, 2001 5:19 PM
To:	Miller, Stephanie
Cc:	Tycholiz, Barry; Steffes, James D.; Lawner, Leslie; Nicolay, Christi
Subject:	RE: Kern River 2002 Expansion Project (CP01-31)

Yep - in fact, they did.  I just haven't got around to summarizing the order yet.  Here's some excerpts:

"We reach no determination regarding whether PG&E Transmission's system-wide cost of fuel will increase above the current cost, since the outcome depends on numerous factors, such as the total pipeline volumes transported and the price of fuel.  Instead, as discussed below, and in accordance with Enron's request [way to go, FERC!!], we will act to insulate existing shippers from increased fuel costs attributable to the proposed expansion."

After suggesting that it would have been more appropriate to calculate fuel costs by using the average of the latest twelve months of actual data in place of the theoretical maximum rate, FERC directed "PG&E Transmission to design a surcharge to ensure that expansion shippers are subject to an incremental fuel charge for fuel costs above the costs attributable to fuel absent the proposed addition of 97,500 horsepower of compression.  In addition, PG&E must indicate compliance with this condition whenever it files to adjust its compressor fuel surcharge and whenever it files its annual gas fuel reimbursement reports." (emphasis added)



 -----Original Message-----
From: 	Miller, Stephanie  
Sent:	Wednesday, July 25, 2001 4:48 PM
To:	Cantrell, Rebecca W.
Cc:	Tycholiz, Barry
Subject:	RE: Kern River 2002 Expansion Project (CP01-31)

Do you think the Commission would apply this same principal to PGT's 2002 expansion?
 -----Original Message-----
From: 	Cantrell, Rebecca W.  
Sent:	Wednesday, July 25, 2001 4:36 PM
To:	Miller, Stephanie; South, Steven P.; Gay, Randall L.; Sullivan, Patti; Allen, Phillip K.; Shireman, Kristann; Superty, Robert; Calcagno, Suzanne; McMichael Jr., Ed; Smith, George F.; Grigsby, Mike
Cc:	Nicolay, Christi; Lawner, Leslie; Steffes, James D.; Canovas, Guillermo; Pharms, Melinda; Kaufman, Paul; Fulton, Donna
Subject:	Kern River 2002 Expansion Project (CP01-31)

According to the Draft Order that was voted out at the Commission meeting today, the subject project, as amended to reflect the approval of the California Action Project, is approved, subject to certain conditions including restrictions on rolled-in rate treatment.  

The Commission was concerned that the additional fuel costs could exceed the rate reduction to existing shippers.  Kern River's projections were based on a $3.00/dth cost of gas.  The Commission conditioned its approval of rolled-in rate treatment by providing that, "in its future compliance tariff filing to roll-in the costs and lower transmission rates, Kern River must submit revised exhibits showing the excess revenues over the incremental cost-of-service, and the net benefits after anticipated fuel costs are considered" (Kern River's settlement in RP99-274 requires it to reduce its rates for existing customers coincident with the in-service date for newly certificated facilities if it receives approval for rolled-in rate treatment).  Additionally, if during any year, the combined level of the electric and gas fuel expenses exceed the benchmark level(s) of excess revenues established in the tariff filing, then Kern River must allocate the excess portion of fuel costs to its expansion shippers.  Thus, Kern River must always assure that this expansion does not increase costs for existing shippers.

The Commission rejected concerns of the existing firm shippers as well as SoCal Gas about the potential for additional curtailment at Wheeler Ridge.  The Commission found that the potential for increased curtailment did not warrant rejection or modification of Kern River's proposal, in part because SoCal Gas does not offer firm service on its system and therefore existing shippers have never had any assurance that Socal Gas would accept their gas.  

The Draft Order is 49 pages long.  Please advise if you would like a hard copy.