This is the content of an email: On Thursday last week the Commission eliminated the old "Texas Eastern" rule that required pipelines to obtain prior FERC approval before contracting for transportation and storage capacity on upstream or downstream pipelines. The new rule allows pipelines to acquire and use such capacity without going to FERC first. The rule does reiterate that bundled sales of gas are still prohibited, and further provides that the acquiring pipeline will be financially at risk for the costs of the acquired capacity. Interestingly, the acquiring pipeline apparently has the option of selling the acquired capacity under its own rate schedules or of releasing the capacity pursuant to its capacity release program. The order is silent on whether the price cap applies to short term releases of acquired capacity. While we are still reviewing the order and may provide additional guidance at a later time, I'd emphasize for now that our normal contract approval procedures and authority thresholds should be deemed to apply to capacity contracts. For example, the "Approval Authorization for Cash Expenditures" dated Feb. 3, 2000 provides Dave and Steve with authority up to $250,000 on operating expense obligations. Please contact me if you have any questions on this matter. DF
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Upstream Capacity