Subject: El Paso Complaint

Below is a summary of the discussions last week regarding the complaint  against El Paso for oversubscribing the Socal Topock Point.
The meeting started out by summarizing the dollar impact of the Border cuts  to Amoco and Burlington of $3 million dollars and the additional fuel costs   of $15 million that they have incurred when the mainline fuel was reduced and  the gathering fuel was increased.
Accordingly, producers are seeking a  minimum of $17  million in compensation in some form or  another.
The biggest concern is that a total of 1.2 bcf/day is being nominated at the  Socal Topock which can only deliver 540000 mmbtu/day.
Socal Gas stated that  this problem should go away when there system becomes unbundled (referred to  as Gatekeeper)..
The proceeding is currently pending CPUC approval and could  be implemented as early as October 1, 2001.
When the Gatekeeper is  implemented  , only 540000 mmbtu/day will be accepted at the Socal Topock  border and must match up with the intra-state transport.
SoCal Gas suggested taking the 1.2 bcf/day of nominations at the Topock  delivery point and divide it up based on the original intent of the  capapcity-  400 to Mohave; 540 to Socal Topock;  and 180 to PGE Topock.
They  also stated they would accept less than 540 at Topock but  needed a minimum  of 300 to meet core needs.
However, they wanted some type of compensation if  their volume was reduced.
They also agreed to live with the status quo  until the Gatekeeper was implemented.
This would result in firm rights being  established at Socal Topock based on downstream rights.
Williams owns Block 3 capacity and is willing to look at a CD reduction or a  reduced take requirement or use of alternate points with a rate adjustment.
After much discussion,  El Paso came back with the following counter proposal:  Recommended interim solution until Socal Gatekeeper implemented.
Does not  relate to receipt point rights.
1)  Block 1 Capacity will always be alternate to Socal Topock (198000);  2)Block II Capacity can not be sold at PGE Topock (614000)  3) Amoco and OneOk each have a contract 45000/d which can go to Topock or  Ehrenberg.
It is recommended that they  give up their Ehrenberg right and keep Topock right and Socal will give up  like amount at Topock as well as shift an additional  70000 mmbtu/day from  Topock to Ehrenberg resulting in approx.
115000 being shifted  to Ehrenberg.
4) Rights fro expansion shippers would be carved up as follows:     Socal Topock   PGE/Mohave Topock Texaco   40    135 Burlington  26    74 Aero   5    15 Borax   7    12 LADWP  0    36 SWGas   0    20  5) Socal Topock would now be divided as follows:  Expansion Shippers  78000  Socal Gas           425000 BLK 3                               348000 (25-Amoco;20-Oneok;99-Williams;189  El Paso Merchant;15-Wlliams) Total 851000 540 divided by 841 would result in 37 percent cuts or 63 percent thruput.
The producers were not happy with having to live with 37 percent cuts and  felt that any transport sold after their Sept 28 complaint should be cut off  the top which would be El Paso merchant services Blk 3.
Separate meetings were then held amongst the Topock shippers to duscuss El  Paso's counter -proposal.