FYI.  This is receiving close scrutiny by the Commission.  RA

---------------------- Forwarded by Ray Alvarez/NA/Enron on 07/26/2001 05:59 PM ---------------------------


Nancy Bagot
07/26/2001 05:54 PM
To:	Ray Alvarez/NA/Enron@ENRON
cc:	 

Subject:	TW neg. rate order summary

(1)	Transwestern Negotiated Rates proceeding, RP97-288 et al.:  The order calls for an expedited hearing to explore four primary issues (listed below).  The draft order passed at the meeting by a vote of 5 - 0, and language on revisions to TW's tariff and posting policy were added to the final order to assuage concerns expressed in the discussion of the case at the meeting.  

The case was called for public discussion by Commissioner Breathitt, who wanted to highlight that the additional "limited scope" fast track hearing  is the "right way to go" to understand why negotiated rates that were seventy times the maximum recourse rate are just and reasonable.  Breathitt's additional question in this case is why shippers would agree to such rates when lower rates were available.

In the final order, Breathitt's concerns about the posting of the operational capacity as such were reflected in language ordering TW to revise its tariff and web postings to provide clear identification of operational capacity and to post and contract such capacity on each day of its availability (i.e., on a day-to-day basis) unless it can demonstrate that operational capacity will be available for some longer period of time.

At Wednesday's meeting, Wood noted that "we bumped into something here," though he did not mention possibilities but instead agreed that a procedural schedule to "vet the issues in the light of day" was the best route.   The four issues set for hearing are:  
		?	whether the transportation capacity was advertised and awarded in an accurate and fair 			manner consistent with Transwestern's tariff; 
		?	whether the transportation rates?were the product of an exercise of market power (i.e., did 			TW withhold capacity that otherwise could have been made available under recourse service 			in order to make the capacity available under negotiated rate charges at substantially higher 			rates); 
		?	why the shippers agreed to these rates when significantly lower recourse rates should have 			been available under our negotiated rate program; and 
		?	why the awarded capacity appears to be available without interruption while firm 				transportation service under Transwestern's recourse rate was not.