Re: HOW DOES THE COST RECOVERY FOR THE GAS UTILITY WORK?

Yes, the utilities can pass through the gas costs. They face an "incentive
ratemaking mechanism" that includes a "market benchmarket" that they must
meet or beat. The benchmark's a composite of spot indeces. So as long as
they buy spot, they can meet the benchmark and pass everything through.
(Ill-conceived procurement incentive, particularly in these days when prices
are going north, but at least there's no price cap creating gas
undercollections like there is on the electric side.) If you need anything
else, just holler.

Jeff

James D Steffes
01/11/2001 06:25 PM

To: Jeff Dasovich/NA/Enron@Enron, Andre
Cangucu/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc:
Subject: HOW DOES THE COST RECOVERY FOR THE GAS UTILITY WORK?

Jeff --

Wanted to confirm that the Gas Utility has a PGA that allows for pass through
of its gas purchase expense? Is that right?

Jim