Shelley,
Since Steve and Kevin are out, I'll wade in here.  The TW Red Rock expansion 
is for 150,000 Dth/d.  It is a mainline expansion, allowing Transwestern to 
flow west from receipt points East of Thoreau to the California border.  As 
you recall, we held an open season in November for an [undefined] expansion 
to the system.  Customers were encouraged to define volumes/price/path in 
their expressions of interest.  As you'd expect, we received wide-ranging 
expressions of interest for various locations/term lengths/paths/pricing.  
After months of work to define the most economical project for TW, we were 
able just this week to go back to the original open season respondents and 
define the project for them.  We've given them until March 2 to provide us 
with a binding bid for capacity in the expansion.  We'll look at those bids 
once they're received and sort/allocate them [in the event volumes bid exceed 
150,000] according to our tariff.   We've identified what receipt and 
delivery point capacities are available for customers on the expansion.  
There is no capacity available for deliveries to SoCal Gas at Needles.  We 
expect gas to be delivered to PG&E, Southwest Gas and the two new power 
plants recently constructed off TW at the Cal. border.

In my view, and I think a view shared by many, is that there really isn't 
[necessarily] a lack of upstream interstate capacity.  Rather, the bigger 
obstacle to meeting growing gas demand in [Southern] California are the 
physical and regulatory bottlenecks in the California utility systems.  For 
example, SoCal Gas has a physical bottleneck coming off TW into its Line 235 
that limits TW to 750,000 Mcf/d sustainable capacity.  With the addition of a 
modest horsepower increase at the SoCal Gas receiving station, they could 
easily take another 150,000 Mcf/d off TW.  Similar bottlenecks exist into 
SoCal Gas Line 3000 system off EPNG at Topock, as well as the interconnect 
with PG&E and Kern/Mojave at Wheeler Ridge.  The Line 225 takeaway capacity 
from Wheeler Ridge is rated only at 680,000 Mcf/d.  PG&E and Kern/Mojave 
could easily deliver over 1 Bcf/d.  The problem at Wheeler Ridge will only be 
exacerbated if both PG&E and Kern are successful in building expansions to 
their systems.  The clearest description of this problem I've ever heard came 
from Jeff Dasovich.  Jeff likened the interstate pipelines serving California 
to "an interstate highway system that ends in a dirt road."  The gas 
transmission infrastructure in California has been sorely neglected.  In 
fact, if it hadn't been for the construction of Kern/Mojave in the early 
'90's building directly into Kern County, problems would be much worse 
today.  The issue has reached such a crescendo in California, that even SoCal 
Gas is convening an industry "forum" to discuss intrastate infrastructure 
issues on March 8.  Transwestern will be represented there.

As to regulatory bottlenecks, the CPUC launched an investigation a couple of 
years ago into the unbundling of the gas industry in California.  In an 
unprecedented effort, the majority of stakeholders in the SoCal Gas system; 
marketers, producers, pipelines, the CPUC's own Office of Ratepayer 
Advocates, and SoCal Gas itself, offered up a comprehensive unbundling 
proposal to the CPUC for its consideration and approval.  Unforntunately, the 
vested interests of the new owners of former utility generation, used to 
having SoCal Gas system resources for balancing/swings [paid for by other 
customer classes], put up significant resistance to the comprehensive 
settlement proposal.  This generator opposition, along with the well 
publicized timing of problems blamed on electric system unbundling, have put 
a stake in the heart of the regulatory reform process.

To answer your question about larger expansions, as I said above, I'm not 
sure that additional interstate pipe [beyond the current list of expansions 
on TW, PG&E and Kern] necessarily has to be put into the ground in order to 
meet near term (3-5 year) demand in California.  However, I do believe that 
California must take a rational look at its infrastructure needs with an eye 
towards relieving significant physical and regulatory bottlenecks in its 
intrastate transmission system.

 -----Original Message-----
From:  Corman, Shelley  
Sent: Wednesday, February 21, 2001 7:19 PM
To: Miller, Mary Kay; Fossum, Drew; Harris, Steven; Hyatt, Kevin; Scott, 
Susan; Fawcett, Jeffery; Petersen, Keith; Lowry, Phil; Martin, Jerry D.; 
Shafer, John; Keller, John
Subject: California Data Requested 


Through INGAA, Kevin Madden has requested certain information related to the 
issue of new infrastructure to serve the California market.  He asked INGAA 
to ask each of its members whether they had plans for new capacity to 
California and what obstacles exist in meeting California demand.  He asked 
what FERC can do to speed the process of getting new pipe in the ground?

I responded that yes Transwestern is looking at expansion opportunities.   
Obstacles include intrastate infrastructure and air permitting times.  Kevin 
replied that he had heard these same exact themes from El Paso, but would 
like to know more.  Phil Lowry suggested at staff meeting that getting 
equipment is more of a critical path than air permitting.  This should be 
factored into any further response.  Stan is planning to see Kevin next 
Tues.  I need to put together information responsive to Kevin's requests by 
this Friday.  Here is my outline of data that I need to gather:

Transwestern Expansion 
? Red Rock project -- size, timing, etc. 
? Longer term expansion?
? Review jurisdictional obstacles to building into the state?

State of Intrastate Infrastructure
? Provide copy of recent California Energy Committee Study
? Check with Jeff Dasovich for other materials.

Air Permitting - outline of process / timing

Equipment Procurement - lead times, shortages, other issues

What help are we looking for from FERC?
? Emergency certificate?

Please let me know if you can supply me with any of the information on this 
outline.
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