QUESTION: As you know, current firm contracts on Transwestern provide for delivery of 250 MMcf/d of gas to Topock. In the context of the Gallup Expansion, Transwestern has entered into firm contracts for an additional 40 MMcf/d to Topock. Once the Gallup expansion is built, Transwestern will have a total of 290 MMcf/d of firm capacity under contract to the Topock delivery point: 40 MMcf/d more than PG&E has agreed to accept while PCBs continue to be present. Bill Cordes has asked what Transwestern's potential liability to shippers would be if PG&E's refusal to accept deliveries due to the continued presence of contaminants causes Transwestern to have to curtail firm service at PG&E/Topock. The legal answer is that Transwestern's tariff provides for a reservation charge refund but does not limit the damages that could be sought by a shipper. More specifically, Rate Schedule FTS-1 specifically provides for a reservation charge refund if Transwestern fails to deliver gas for a firm shipper. In December, January, February, July and August, the shipper is entitled to a reservation charge refund for all nominated and confirmed quantities not delivered. In all other months, the shipper is entitled to a refund only if deliveries fall below 75% of nominated/confirmed quantities for a period of 75 consecutive days. The tariff does not preclude a shipper from seeking other damages resulting from Transwestern's failure to provide service under an FTS-1 contract. A shipper whose firm service is curtailed would likely incur damages in addition to the reservation charge, including, for example, the cost of buying spot gas or damages resulting from the shipper's inability to fulfill contractual obligations. Such damages could be recovered in a breach of contract action. Not all shippers would incur such damages because some might be willing to take delivery of gas at alternate points if capacity is available at such points. Bill has asked Steve to work with me in quantifying our potential exposure. I could really use your help in putting a dollar amount on potential damages. Can we meet briefly to discuss this? I'm available after the Gallup meeting tomorrow a.m., or after lunch on Friday...or we can discuss a meeting time for next week. Thank you.
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ANS: Confidential: PG&E/Topock issue

QUESTION: Marie is updating her list and preparing a general memorandum in connection with the brokerage and futures agreements. I have the following times available to meet (and I think we should schedule about an hour): Thursday between 1:30 and 3:15 Friday after 10 am Please let me know as soon as possible of your preference and I'll try to accommodate everyone. Thanks. Sara
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ANS: Review of Brokerage Agreements

QUESTION: I will be working on all RAC bonuses on Wednesday and ask that each of you review your department's bonuses on Thursday so that all of RAC can be submitted on Friday. Thanks. Rick
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ANS:
RAC Bonuses