RE: WBI Rate Base Study ,
 Mark,

Rate case settlements reached between a pipeline, its customers and Commiss=
ion Staff sometime prescribes the treatment of gains on the sale of assets =
and specifically the sale of base gas volumes (eg Columbia, CNG settlements=
).  In review of the past two rate case settlements of Williston Basin (WBI=
) I found no such provisions.  In its current rate case proceeding before F=
ERC a limited settlement was reached which dealt primarily with net plant a=
nd labor costs.  A hearing was held on all remaining issues and is currentl=
y in the briefing stage.  Neither in the limited settlement, nor in the hea=
ring was disposition of base gas revenues addressed.

However, the reorganizational settlement that conveyed facilities from MDU =
to WBI may be a factor.  As a result of restructuring under 636 WBI was obl=
igated to sell certain excess volumes of company owned working gas (priced =
at $.47 /mcf) to its customers.  WBI proposed to sell the gas at market and=
 retain any profits.  As mentioned in the LeBeoeuf, Lamb memo the Commissio=
n addressed this issues several times, reversing itself in the process, and=
 finally ordered that WBI must sell the working gas at cost.  Though not re=
lying entirely on the reorganizational settlement, throughout the various o=
rders, the Commission referenced the 1985 reorganizational settlement as re=
quiring any gains on the sale of working gas to be flowed through to WBI cu=
stomers.  WBI sought rehearing, arguing that the Commission was taking a ve=
ry broad interpretation of the settlement.  The Commission raised the issue=
 again in its order on rehearing, among other things, and WBI didn't seek r=
ehearing or pursue that particular argument further, which the Commission p=
oints out in its final order.

As LeBeoeuf Lamb asserts, the environment (Order 636 restructuring) in whic=
h the Commission ordered flow-through of profits on the sale of storage vol=
umes has changed and those arguments may not be applicable anymore.  But, t=
he reorganizational settlement might be something to take into account and =
should be discussed with WBI.  Just something to be aware of.

If you have any questions please call.

Robert
 -----Original Message-----
From: =09Whitt, Mark =20
Sent:=09Tuesday, September 25, 2001 5:17 PM
To:=09Neustaedter, Robert
Cc:=09Tycholiz, Barry; Harrison, Tyrell
Subject:=09WBI Rate Base Study

Just wanted to check in and see if you were able to learn anything useful b=
y looking through the WBI rate cases?

I will be out the next couple of days so if you email me please cc Barry Ty=
choliz and Tyrell Harrison.
Thanks

Mark
mark.whitt@enron.com