I'm OK with this agreement.  Christine, I appreciate your explanation of how 
we developed the rate.  Hopefully, once FERC approves our purchase and sale 
of options, we can price them as a stand alone service.  For now, including 
the optionality as a bundled component of the total discounted rate--as we 
did here--is appropriate.     




Christine Stokes
08/28/2000 03:00 PM
To: Steven Harris/ET&S/Enron@ENRON, Mary Kay Miller/ET&S/Enron@ENRON, Glen 
Hass/ET&S/Enron@ENRON, Mary Darveaux/ET&S/Enron@ENRON, Drew 
Fossum/ET&S/Enron@ENRON
cc: Kevin Hyatt/ET&S/Enron@Enron 

Subject: Red Cedar - Contract Approval Request

TRANSWESTERN PIPELINE COMPANY
CONTRACT APPROVAL REQUEST


Please review the attached non-standard discount letter to Red Cedar 
Gathering Company (Red Cedar).  The discount letter provides Red Cedar a five 
year discount rate, beginning January 1, 2001, for 125,000 Dth/d of Red Cedar 
to El Paso/Blanco capacity for year 1, and 150,000 Dth/d of described 
capacity for years 2-5.

The base transportation rate for the described capacity is $.02/Dth/d, 
escalating at $.005/Dth/d per year.  Red Cedar is also paying an additional 
$.001/Dth/d for a one-time option to request to reduce their total MDQ in 
years 4 & 5 to a level between 100,000-150,000 Dth/day.  Also,  year 1 of the 
discount rate includes a "reimbursement surcharge" of approximately 
$.009/Dth/d for Transwestern's capital expenditure required to increase the 
existing receipt point capacity at the Red Cedar interconnect.   

Red Cedar has been provided alternate delivery capabilty at Transwestern's 
I/B Link, in addition to alternate receipt capability at a proposed new 
interconnect with Red Cedar in Transwestern's Ignacio to Blanco Area.

Please indicated approval via REPLY WITH HISTORY.  If any questions arise, 
please contact me at x5702.   All Officers approvals will be forwarded to Dan 
McCarty for final Officer approval.