RE: FW: Gallup Peak Power Avoidance Data Points ,
 According to the copy of the contract I have, under Exhibit A,=20

=091. The Rebate.  A portion of CDEC's demand charge associated with CDEC's=
 generation fixed costs shall be avoidable by ECS if Customer operates the =
Compressor such that ECS is able to avoid placing a load on CDEC's system d=
uring certain CDEC coincidental peaks for any applicable month.  To calcula=
te the monthly rebate, the actual demand charges as billed by CDEC will be =
subtracted from the Billing Demand Basis.  The Billing Demand Basis is the =
maximum demand charge on 10 MW of peak demand, assuming no peak avoidance d=
uring the applicable month.  Thus, the Customer's Rebate shall be a portion=
 of the Billing Demand Basis that ECS is not billed by CDEC as actual deman=
d charges.

The way I interpret this wording, we would be entitled to a demand charge r=
ebate even if we only slow down the unit during the peak period.  I've only=
 a copy of last August's bill, but we used 7.93 MW during Tri-States (CDEC'=
s generation) peak.  At $8.86/kW (generation demand), this would entitle TW=
 to a rebate of $18,340 for the month of August alone.  To me it is unclear=
 if TW is actually receiving this rebate.  I've got Mark Walton looking int=
o the issue.  Note that there is an additional "transmission demand" of $3.=
35 /kW that is coincident with CDEC's peak.  Currently, we have no method o=
f predicting CDEC's peak.  Apparently for the month of August, CDEC's and T=
ri-State's peaks did not occur at the same time (although there is no speci=
fic information on the CDEC bill as to when their demand peak occurred) as =
the Tri-State peak and CDEC peak demand charges are based on different load=
s.  Interpretation of the contract language would lead one to believe the r=
ebate would only apply to the demand associated generation, and thus be val=
ued at $8.86/kW.  Even so, if we avoided CDEC's peak, it would be a saving =
to ECS and thus to Enron.  I understood from James Centilli that the econom=
ics were based on avoiding the peak demand 70% of the time (at $8.86/kW or =
$12.21/kW I don't know).

David, you are correct, we only have to avoid one peak in the month, the pr=
oblem is predicting which peak is going to be the largest peak in the month=
.  You don't know for sure on the first day of the month if the load on tha=
t day will be higher than the load on the last of the month.  Below is a li=
st Tri-States historical peaks (in MW):

1/3/2000=091114
2/1/2000=091048
3/20/2000=091080
4/3/2000=09 977
5/23/2000=091126
6/22/2000=091381
7/7/2000=091888
8/14/2000=091924
9/5/2000=091541
10/23/2000=091296
11/17/2000=091439
12/18/2000=091534
1/30/2001=091516
2/9/2001=091482
3/1/2001=091388
4/22/2001=091251
5/25/2001=091407
6/29/2001=091932
7/31/2001=091939
8/6/2001=092008
9/4/2001=091699

For January 2000 the peak was on the 3rd, in 2001 it was on the 31.  The pr=
oblem is you don't know for certain which day of the month will have the pe=
ak.  The contract did not specify they would only have one peak that they w=
ere going to interrupt us on, only that if we avoided their peak (whenever =
it occurred) we would save in demand charges.

Using the most conservative approach to avoid a demand peak, you would not =
run at all on the first day of a month (the first day is always a peak day =
in the month to date). You would only run during the second day when the sy=
stem load is less than the peak we saw on the first day.  If the system loa=
d on the second day is higher than that of the first day, this now becomes =
the new peak of the month to date.  You would repeat this approach for each=
 subsequent day in the month, shutting down or slowing down for each new pe=
ak in the month to date.

The approach I take is a little riskier in that it looks at last years load=
 and 'budget' loads to estimate a 'minimum expected monthly peak'.  It than=
 allows operation of the unit anytime the system load is less than the high=
er of (1) the actual monthly peak to date and (2) the 'minimum expected mon=
thly peak'.  Thus my utility would let you run for the majority (and possib=
ility all) of the first day and would have fewer peaks during the month tha=
n the conservative approach.

You are correct about ECS's obligation in establishing an automated system.=
  That system has turned into my system.  Sections 3.6 and Article 6 of the=
 contract discuss this topic.  In my mind, ECS did not live up to their end=
 of this agreement.  CDEC didn't do much either, only providing us access t=
o Tri-States web site.  Tri-State changed their web site mid year requiring=
 a change in the automated process (due to file format changes) delaying my=
 implementation.  I offered to take over the automated system sometime arou=
nd the end of the first quarter this year to force some progress on the iss=
ue.  There may me legal recourse available to recover some past demand char=
ges due TW from ECS.

By my calculation/contract interpretation, the maximum rebate TW could rece=
ive is $8.86/kW * 10,000kW/Month * 12 Months/Year =3D $1,063,200/year.

 -----Original Message-----
From: =09Roensch, David =20
Sent:=09Thursday, October 04, 2001 11:16 AM
To:=09Choquette, Gary; Schoolcraft, Darrell; Jolly, Rich
Cc:=09Asante, Ben; McChane, Bob; Sturn, John; Watson, Kimberly
Subject:=09RE: FW: Gallup Peak Power Avoidance Data Points

Gary you are correct in your assesment that we can avoid electrical power d=
emand charges if we shut down during power utilities pear power period.  Ho=
wever, in discussions prior to finalizing this contract, I got the impressi=
on that a decision had been made that we MUST shut the unit down during pea=
k demand periods or the econimics of the project did not come out.  (these =
discussions included: Mike Nelson, Rich Jolly, Mary Kay Miller, Dave Fotti,=
 Ben Asante, D. Schoolcraft, James Centelli, Kevin Hyatt etc....)

Second:  The issue came up of "What about during tariff months?", can we st=
ill shut down during peak demand periods.  Again, if I remember correctly, =
the answer was, Yes, even during tariff months we don't have a choice we wo=
uld have to shut down. =20

Third:  I was under the impression that from a risk standpoint we would not=
 have to deal with more than ONE peak demand period in the month.

Fourth:  ECS was responsible for working with the CDEC to establish an auto=
mated system which would read CDEC's online load profile and convert the re=
ading into a signal which would automatically control the loading on the Co=
mpressor and Motor (which would provide us with the opportunity to avoid th=
e CDEC's peak load periods).  TW of course would have an override option.  =
However, I was also under the impression that ECS would hold TW harmless & =
reimburse, if this feature was not provided. =20

I may be interpreting this incorrectly but again the CSA specifies ECS's ob=
ligation in helping us avoid the demand energy charge.  The demand charge i=
s $12.21 * 10,000 KW  * 12 Months =3D $1.465,200 of potential rebate back t=
o TW each year. =20
=09=09
=09=09


 << File: rebate_sensitivity.xls >>=20



---------------------- Forwarded by David Roensch/ET&S/Enron on 10/04/2001 =
09:40 AM ---------------------------
From:=09Gary Choquette/ENRON@enronXgate on 10/03/2001 09:46 AM CDT
To:=09Darrell Schoolcraft/ENRON@enronXgate, Rich Jolly/ET&S/Enron@ENRON, Ri=
ck Smith/ET&S/Enron@ENRON, David Roensch/ET&S/Enron@ENRON, Todd Ingalls/ET&=
S/Enron@ENRON, DL-ETS Gas Controllers@/O=3DENRON/OU=3DNA/CN=3DRECIPIENTS/CN=
=3DDL-ETSGASCONTROLLERS@EX@enronXgate, Dale Ratliff/ENRON@enronXgate
cc:=09Ben Asante/ENRON@enronXgate, Kim Kouri/ENRON@enronXgate, Bob McChane/=
ENRON@enronXgate, John Sturn/ET&S/Enron@ENRON, Errol Wirasinghe/ENRON@enron=
Xgate=20

Subject:=09RE: FW: Gallup Peak Power Avoidance Data Points

As I understand/interpret the Gallup contract, we can completely avoid elec=
trical power demand charges (approximately $42,000 per month) if we do not =
run the unit during the power utilities peak power period.  If we can not s=
hut down the unit, we can still reduce or demand costs by minimizing our po=
wer usage during the peak period.

Unlike Hubbard where the contract states avoiding the peak during a specifi=
ed period of the day (5-7 PM), Gallup requires us to guess both the day of =
the month their peak will occur and the time of day.  Through access to Tri=
-States history data, I can guess what I think the minimum peak for the mon=
th will be.  I can look at the current day's usage and estimate if today's =
peak will be higher than the higher of (1) my estimated peak or (2) the act=
ual peak so far this month.  If so, the "Probability today is a peak" will =
be near 100 indicating the operators they should expect a possible power pe=
ak sometime today.   The "Probability now is peak" approached 100 when an a=
ctual peak is underway.  The Tri-State Power Peak In Progress alarm trigger=
s when a power peak is underway.

Note that it is impossible to predict with 100% accuracy if any day in the =
month is an actual power peak.  If the first day of the month has an estima=
ted peak 1000 and last years peak for the same month, was 985.  It appears =
possible that this will be a power peak day.  Assume that the actual peak u=
sage for the first day was 1010.  Now on the second day of the month, the e=
stimated peak is 965, not likely to be a power peak day.  The third day has=
 an estimated peak of 1005, a possible power peak day.  If the actual for t=
he third day is 1012, it now becomes the new peak for the month.  If all ot=
her estimated peaks in the month are significantly below 1012, they are not=
 likely to be power peaks, and unit turndown is not required.

The point is, to completely avoid demand charges, we would have had to shut=
 down the unit for a period on the first day of the month, and also on the =
third day.  The utility integrates their peak over a 30 minute period, thus=
 the minimum time the unit could be down.  I'm guessing that my utility cou=
ld predict around seven peaks requiring turndown in a given month.

So far this month, I guessed a power peak on 10/1/01 starting at 20:18 and =
ending at 21:05.  The actual peak so far this month according to the utilit=
y was 10/1/01 starting at 20:30 lasting to 21:00.


I'm sorry for any confusion.  I had asked Dale to pass this information on =
to the Operators.  If there are any additional questions, do not hesitate t=
o call me at 87-7546.
david.roensch@enron.com