FW: Bilas , Proposed Decision SoCal GIR FYI  -----Original Message----- From: 	Hass, Glen   Sent:	Wednesday, October 17, 2001 8:36 AM To:	Watson, Kimberly; Lindberg, Lorraine; Lohman, TK; Donoho, Lindy; Dasovich, Jeff; Pryor, Tony; Lichtenwalter, Blair; Lokey, Teb Cc:	Harris, Steven; Kilmer III, Robert; Miller, Mary Kay Subject:	FW: Bilas , Proposed Decision SoCal GIR As requested, Mark Baldwin has put together a summary of the Proposed Decision and Comment Points for filing on Friday.  Below are his comments which we can use for discussion purposes at the conference call later this morning.  Having reviewed the Proposed Decision I would agree with Mark's assessment in that while we may prefer that the Commission not modify the Comprehensive Settlement, overall the modifications made should not negatively impact Transwestern.  The Proposed Decision retains two important aspects of the CS for Transwestern:  1)  Unbundling of the SoCal backbone transmission system and receipt point capacity and 2) Retention of primary firm RP capacity of 750MM/d at Needles from Transwestern.  gh  -----Original Message----- From: 	@ENRON   Sent:	Tuesday, October 16, 2001 5:50 PM To:	Hass, Glen Subject:	Bilas , Proposed Decision SoCal GIR Glen, I have reviewed the 10/10/01 Revised PD of Comr. Bilas as requested. In view of the entirety of TW's interest ,I still ascertain that TW can support the current 10/10 PD. Noted below for your information and review is a summary of the Modifications to the CSA that Bilas is currently offering : 1)Market concentration limits reduced from 40% to 30 % of available receipt point capacity. TW has preferred no limits to market concentration historically. However, as before, I do not believe pushing this issue will be successful or productive for TW. There are no market concentration limits in the secondary market. (Although Bilas warns market participants that any misbehavior will be subject to CPUC investigation) P.44 2)SoCal will be required to make available on a daily basis any unutilized firm RP capacity. I don't see any negative impact on TW, perhaps positive. P.45 3)Price Cap for secondary intrastate market set at 120 % of SoCal firm rate. This is the same cap that applies to SoCal. I don't like the precedent set in this area, however it assures that the economic value allocation between SoCal citygate and supply basin will proportionately tend toward the interstate system providers in any tight transport/supply scenario. P.46 4)Not really a change , but Bilas mentions support for Hector Rd. as a delivery/receipt at Ferc. 5)PD does not reduce the core's interstate capacity nor their storage capacities but rather maintains these capacities at current levels. Current level 1044 MMcfd, proposed 1000 MMcfd on the interstate system and current storage 70 BCF, 327 MMcfd of injection and 1,935 MMcfd withdrawal Vs proposed 55 BCF.  I see no clear negative impact on TW from this change.P. 52 &54. 6) CTA's (Core Transport Agents) allowed to reject only their prorata share of non-reliability storage service. No impact on TW interests. P. 58 7) SoCal directed to present(via Advice Ltr.) how the cost of noncore default balancing will be allocated ONLY to those noncore customer using this service and not to the Core customers. I see no impact on TW. P.62 8)PD rejects the requirement that SoCal/SDG&E file an application with a proposal to address core procurement function as the default provider.  I see only positive attributes of this change for TW. P.63 9)Preserves the right for SoCal/SDG&E to seek recovery of expenditures associated with the transfers of customers from Core to Core Aggregator. NO impact on TW. P.66 10)PD orders a 10 % cap on ITCS (stranded cost)responsibility borne by bundled core customers due to unbundled core interstate capacity. No direct impact upon TW interest, however, likely a touchy point with noncore interest. P. 75 11) PD orders that the core contribution to noncore ITCS will end effective the adoption of the PD. Additionally, noncore customers to pay 50% of core ITCS till the end of the core TW and EPNG agreements. No negative impact on TW. Noncore customers bear additional expense. The PD estimates an additional $18 million over next 5 to 6 years. P. 78 The PD provides an estimate of increased stranded cost for the noncore between 01 and 06 to be approx. $ 44.4 Million. 12) PD say NO to an increase in the core brokerage fee of $ 0.0039 (to $2.4 cents). No impact on TW interest. P.83. 13) PD treats Core Subscription service differently on an accounting basis. No impact on TW. P.85-87 14)Generally, the PD makes some administrative changes to the small core/ESP market rules and SoCal services and consumer protection implementation . NO impact on TW interest. P 88-100. 15)Lots of tweaking on how SoCal can recover the cost to implement to services envisioned under the CSA. Owing to the fact that SoCal has already started to "implement" portions of the CSA and those cost are accruing to a balancing account etc. Bottomline, not consequential to the approval of the PD. No direct impact upon TW interest. P. 103-110. On whole the centerpiece of TW's interest in this proceeding remains intact. The SoCal receipt points are unbundled along with "SoCal backbone facilities". TW has primary firm RP of no less than 750 mmfcd. Mojave is recognized at only 50 mmfcd firm RP. No receipt point complex is given a preference for capacity expansion. Line 235 appears to remain useful for TW deliveries into the market load centers. The PD modifications to the CSA do not impose upon TW any conditions or costs that would be reason not to support the PD. The parties most affected by the PD are the core aggregators with additional costs and restrictions to service options and noncore customers with additional cost allocations. Points for comments 1) TW agrees with the PD that the centerpiece of positive changes embodied in the CSA in the creation of firm tradable RP rights. This change in SoCal market structure provides all market participants with the proper tools to build long term supply and transportation contracts. 2) Further adoption of the PD substantially reduces unnecessary market inefficiencies at the California border by providing all market participants with gas scheduling certainty. 3) The creation of tradable secondary rights on SoCal's intrastate system will promote competition and generally lead to stable delivered gas prices. 4) The PD correctly observes that the PG&E market structure which relieves upon an unbundled intrastate backbone system work "relatively well" during California's challenging energy markets. 5)TW agrees that the time is ripe for approval of the PD. The energy markets in California have been improving and stabilizing. The Commission promising options are still valid in today's gas market. Further, SoCal is already starting to follow the CSA game plan in their attempts to improve the operating environment on the SoCal system. It is consistent to follow through and make the structural changes required to make permanent these improvements. 6)TW supports SoCal and others whom are approving this PD. (ON THIS POINT, TW SHOULD BE SURE THAT SOCAL IS ON BOARD AS WELL AS OTHER CSA SIGNATORIES, PRIOR TO FILING THESE TYPE COMMENTS) I look forward to discussing these matters tomorrow on the conference call. Mark, IGS. Mark, IGS.