RE: Red Rock form contract ,
 Dot is right with regard to the termination provision.
It was a Natural case.
But it was more than a year or two ago.
(Time flys when you are having fun.)

It was the contracting practices order issued October 16, 1996.  77 FERC 61=
,028.
The order on rehearing was issued March 26, 1998.  82 FERC 61,298.

In both orders the Commission said that the unilateral right to terminate i=
s like a
"semi-firm" rate and a separate rate schedule is required.  Specifically, t=
he Commission said:

=09Under Natural's currently effective tariff provisions governing firm
=09service, it may offer day-to-day, week-to-week, or month-to-month
=09rollovers if it so chooses: but the length of the term must be selected
=09by the shippers.  Natural may not control the length of the firm service
=09by inserting a unilateral right to cancel in its service agreements.  As
=09we indicated in the October 16 order, Natural could achieve the=20
=09'maximization of firm capacity' and administrative convenience of its=20
=09term provision with a 'semi-firm' rate schedule on file in its tariff. =
=20
=09However, Natural cannot provide such a service without a rate schedule
=09for that service on file.  [Footnotes omitted.]  82 FERC at 62,178.

Not sure about the rest of the wording of the proposed provision.
The attached language did not come across to me as a part of Dot's e-mail.

Frazier

 -----Original Message-----
From: =09McCoppin, Dorothy =20
Sent:=09Tuesday, March 27, 2001 10:57 AM
To:=09Fossum, Drew; Miller, Mary Kay
Cc:=09Scott, Susan; Harris, Steven; Hyatt, Kevin; Corman, Shelley; Pavlou, =
Maria
Subject:=09Red Rock form contract


=09I thought that, in the Natural case (from a year or two ago, right?), FE=
RC had a problem with Natural terminating=20
=09in connection with a shipper releasing the capacity -- i.e., FERC saw th=
e provision as preventing the shipper from=20
=09being able to release capacity.  (As I recall, instead of simply saying =
that the discount would no longer be valid if=20
=09the capacity were to be released, Natural had the right to terminate the=
 contract.  I do not recall that the FERC=20
=09had a problem with any termination right by a pipeline, for any reason. =
 However, termination is a serious remedy --=20
=09so reverting to the max rates [or having the rate re-negotiated by the p=
arties] would probably be seen much more=20
=09favorably by FERC as an appropriate remedy.)

 -----Original Message-----
From: =09Pavlou, Maria =20
Sent:=09Tuesday, March 27, 2001 9:32 AM
To:=09Fossum, Drew; Miller, Mary Kay
Cc:=09Scott, Susan; Harris, Steven; Hyatt, Kevin; McCoppin, Dorothy; Corman=
, Shelley
Subject:=09RE: Red Rock form contract

=09I thought a pipeline having unilateral termination rights was a problem =
under Natural.  Maria

 -----Original Message-----
From: =09Fossum, Drew =20
Sent:=09Tuesday, March 27, 2001 8:29 AM
To:=09Miller, Mary Kay
Cc:=09Pavlou, Maria; Scott, Susan; Harris, Steven; Hyatt, Kevin; McCoppin, =
Dorothy; Corman, Shelley
Subject:=09RE: Red Rock form contract

I like the new language, but have added a couple of changes in the redlined=
 version attached hereto (I think mine are in blue).  One of the changes is=
 for clarity and one is to make the contract terminable at our option inste=
ad of automatically terminated if the neg. rate is invalidated and our max =
rate is lower than the Rate [we may want to preserve the contract in that s=
cenario if the market value is even lower than the max. rate!!]   On MKM's =
point, I think the only contract we have sent out is to CalPine, right???  =
I think we explain it to them as a mechanism that is designed to preserve o=
ur benefit of the bargain if FERC changes the rules in the middle of the ga=
me.  If they choke on it, we probably have to take the risk with them since=
 they are are our baseload tenant.  As to other shippers that we haven't se=
nt the contract to, we ought to push very hard to get language like this.  =
I'm sending to Shelley and Dot to get their insight.  Dot--have you guys do=
ne anything analogous in your precedent agreements on the many Florida proj=
ects?  Not necessarily on neg. rates,  but FERC-outs in general?    DF=20



 << File: FERC out amendmentrl.doc >>=20

  =20

 << OLE Object: Picture (Device Independent Bitmap) >> =09  From:  Mary Kay=
 Miller                           03/26/2001 05:13 PM=09
=09=09


To:=09Maria Pavlou/ENRON@enronXgate
cc:=09Susan Scott/ENRON@enronXgate, Drew Fossum/ET&S/Enron@ENRON, Steven Ha=
rris/ET&S/Enron@ENRON, Kevin Hyatt/ENRON@enronxgate=20

Subject:=09RE: Red Rock form contract   << OLE Object: StdOleLink >>=20

These changes look good to me, but how are we going to communicate this wit=
hout raising a big flag that we are concerned with negotiated rate deals?  =
 MK


From:=09Maria Pavlou/ENRON@enronXgate on 03/26/2001 04:13 PM
To:=09Susan Scott/ENRON@enronXgate, Drew Fossum/ET&S/Enron@ENRON, Steven Ha=
rris/ET&S/Enron@ENRON, Kevin Hyatt/ENRON@enronxgate, Mary Kay Miller/ET&S/E=
nron@ENRON
cc:=09=20

Subject:=09RE: Red Rock form contract


Here are my suggestions. Thanks, Maria


 << File: FERC out amendment.doc >>=20
 -----Original Message-----
From: =09Scott, Susan =20
Sent:=09Monday, March 26, 2001 3:42 PM
To:=09Fossum, Drew; Harris, Steven; Hyatt, Kevin; Pavlou, Maria; Miller, Ma=
ry Kay
Subject:=09Red Rock form contract

At Drew's request I've drafted the attached language to address the possibi=
lity that FERC might change its negotiated rate policy statement or otherwi=
se invalidate the negotiated rate in the contract.  Stan brought this idea =
up at this morning's staff meeting (for those of you who, like me, weren't =
in attendance).  Please comment.
 << File: FERC out amendment.doc >>=20
dorothy.mccoppin@enron.com, drew.fossum@enron.com, kay.miller@enron.com