TRANSCONTINENTAL GAS PIPELINE CORPORATION
0000 Xxxx Xxx Xxxxxxxxx
P.O. Box 1396
Houston, TX 77251-1396
000-000-0000
March 4, 1997
Xx. Xxxxxx Xxxxxx
AGL Resources Inc.
000 Xxxxxxxxx Xxxxxx, X.X.
Atlanta, GA 30308
Dear Xxxxxx:
Enclosed for your records are fully executed originals of the following
agreements for the 1998 Cherokee Expansion Project:
o Precedent Agreement
o Side Letter agreement regarding supply arrangements
Transco hopes to file the certificate application for the project on March 31,
1997, I will forward a copy for your records when the filing is available.
Hope you had a good vacation!
Best regards,
/s/ Xxxxx Xxxxx
Xxxxx Xxxxx
Project Development
Enclosure
Transco 1998 CHEROKEE EXPANSION PROJECT
PRECEDENT AGREEMENT
THIS PRECEDENT AGREEMENT, entered into this 28th day of February, 1997, is
by and between TRANSCONTINENTAL GAS PIPE LINE CORPORATION ("Transco"), a
Delaware corporation, and ATLANTA GAS LIGHT COMPANY ("Atlanta"), a Georgia
corporation. Transco and Atlanta are sometimes referred to individually as
"Party" and jointly as "Parties".
WITNESSETH
WHEREAS, Transco conducted an open season from December 18, 1996 through
January 20, 1997, during which it accepted requests for firm transportation
service to be made available through an expansion of its transmission
facilities, hereinafter referred to as the "1998 Cherokee Expansion Project";
WHEREAS, Atlanta submitted a Complete Request (as defined in Transco's open
season announcement) during the open season and desires firm transportation
service as part of the 1998 Cherokee Expansion Project for 85,000 dekatherms of
gas per day ("Dt/D") from the receipt point(s) specified in exhibit A hereto to
the delivery point(s) specified in exhibit B hereto;
WHEREAS, subject to the terms and conditions of this Precedent Agreement,
Transco is willing to provide such firm transportation service for Atlanta as
part of the 1998 Cherokee Expansion Project commencing as soon as all rights and
regulatory approvals are received and accepted by Transco and all of the
necessary facilities are constructed and ready for service.
1
NOW THEREFORE, in consideration of the mutual covenants herein assumed,
Transco and Atlanta hereby agree as follows:
1. Rights and Approvals. Following the execution by Transco of this
Precedent Agreement, Transco shall seek such contract rights, property rights,
financing arrangements and regulatory approvals, including, without limitation,
the requisite authorizations from the Federal Energy Regulatory Commission
("FERC"), including rates based on a straight fixed-variable ("SFV") rate design
methodology and an incremental cost of service, as may be necessary to provide
firm transportation service for Atlanta of 85,000 Dt/D from point(s) of receipt
set forth in Exhibit A hereto point(s) of delivery set forth in exhibit B
hereto. Transco reserves the right to file and prosecute applications for any
required authorizations, any supplements, or amendments thereto, and, if
necessary, court review, in such manner as it deems to be in its best interest.
Atlanta agrees to use its good faith efforts to cooperate with and support
Transco in obtaining such regulatory approvals and to provide Transco with any
necessary information reasonably requested in order to obtain contract rights,
property rights, financing arrangements and/or regulatory approvals, provided
that Transco shall, upon Atlanta's request, seek confidential treatment of such
information. In that regard, Atlanta agrees to file with the FERC in support of
Transco's certificate application (including rates based on the SFV rate design
methodology) filed pursuant to Section 7(c) of the Natural Gas Act for a
certificate of public convenience and necessity and authorizing the 1998
Cherokee Expansion Project ("FERC Authorization"). In addition, if the FERC
determines that information relating to Atlanta's markets, gas supply, or
upstream transportation or storage arrangements is required from Transco,
Atlanta shall provide Transco with such information in a timely manner to enable
Transco to respond within the time required by the FERC.
2. Service Agreement. Within thirty (30) days after the date Transco
receives and accepts the FERC Authorization, on terms satisfactory to Transco in
its sole opinion, Transco and Atlanta shall deliver and execute a service
agreement under Transco's Rate Schedule FT ("Service Agreement"), provided that
this Precedent Agreement has not been previously terminated. The Service
Agreement shall provide for the firm transportation by Transco for Atlanta of
85,000 Dt/D
2
from point(s) of receipt set forth in exhibit A hereto point(s) of delivery set
forth in Exhibit B hereto.
3. Rates. For the subject firm transportation service, Atlanta agrees to
pay rates as approved by the FERC.
4. Term. Transco's obligation to provide the firm transportation service
contemplated herein and Atlanta's obligation to pay Transco reservation charges
for such service shall commence on the first day on which Transco's facilities
necessary to provide firm service to Atlanta under the 1998 Cherokee Expansion
Project have been constructed and are ready for service as determined in
Transco's sole opinion. Such firm transportation service shall continue for a
primary term of fifteen (15) years from the date that the firm transportation
service commences, and year-to-year thereafter subject to termination after such
primary term by either Party upon one (1) year prior written notice to the other
Party.
5. Termination of Agreements. If Transco has not received and accepted the
necessary FERC Authorizations on or before May 31, 1999, then at any time
thereafter until Xxxxxxx receives and accepts such FERC Authorizations, either
Party shall have the right to terminate this Precedent Agreement by giving (30)
days advance written notice to the other Party; provided, however, that such
termination shall not be effective if during the 30-day period Transco receives
and accepts the necessary FERC Authorizations. Additionally, if Transco has not
commenced the firm shall have the right to terminate this Precedent Agreement
and the Service Agreement by giving twenty-four (24) hours advance written
notice to the other Party; provided that such right must be exercised on or
before November 2, 2000 or else such right shall be waived.
6. Construction, After both Parties' execution of the Service Agreement
pursuant to Paragraph 2 above and Transco's receipt and acceptance of all other
necessary contracts rights, property rights, financing arrangements and
regulatory approvals in a form and substance
3
satisfactory to Transco in its sole opinion, Transco shall proceed with the
construction of the facilities so as to begin firm service by a projected
in-service date of November 1, 1998. If Transco is unable to complete such
construction and place such facilities into operation by such proposed
in-service date despite its exercise of due diligence, Transco shall continue to
proceed with due diligence to complete such construction, place such facilities
in operations and commence service for Atlanta at the earliest practicable date
thereafter. Transco shall not be liable in any manner to Atlanta, nor shall this
Precedent agreement or the Service Agreement be subject to termination if,
despite Transco's exercise of due diligence, Transco is unable to complete the
construction of such facilities and commence firm transportation service
contemplated herein by the proposed in-service date.
7. Prepayment Refund. Transco and Atlanta agree that the prepayment
submitted by Atlanta during the open season for the 1998 Cherokee Expansion
Project plus any interest that accrues on the prepayment amount (any interest on
the prepayment amount calculated hereunder shall be a the interest rate set
forth in Section 7 of the General Terms and Conditions of Transco's FERC Gas
Tariff) prior to the in-service date of the project will be applied to Atlanta's
reservation charges due of the first month of firm transportation service under
the project. In the event that service commences on a date other than the first
day of the month, the reservation charge will be prorated and the prepayment
plus accrued interest will be applied to such pro rated reservation charge. In
the event that Atlanta terminates this Precedent Agreement pursuant to Paragraph
5 above, Transco shall refund Atlanta's prepayment plus accrued interest.
8. Remedies. Atlanta recognizes that Transco will be required to incur
material expenses to construct the 1998 Cherokee Expansion Project facilities by
a projected in-service date of November 1, 1998. In the event that Atlanta fails
to perform its obligations under this Precedent Agreement or terminates this
Precedent Agreement in a manner inconsistent with Paragraph 5 above, Transco
shall have the right to retain Atlanta's prepayment (plus accrued interest) made
in accordance with Atlanta's request for firm transportation service under the
1998 Cherokee Expansion Project and to seek any other legal remedies available
to Transco, provided that any such legal
4
remedy which is a monetary remedy shall be reduced by an amount equal to the
prepayment (plus accrued interest) retained by Transco.
9. Notice. Notices under this Precedent Agreement shall be in writing and
shall be addressed as follows:
If to Atlanta:
Xxxxxx X. Xxxxxx
Executive Vice President and Chief Operating Officer
Atlanta Gas Light Company
000 Xxxxxxxxx Xxxxxx, X.X.
Atlanta, GA 00000-0000
Fax: 404/000-0000
If to Transco:
Transcontinental Gas Pipe Line Corporation
0000 Xxxx Xxx Xxxxxxxxx
P. O. Box 1396
Houston, Texas 77251-1396
Attention: Customer Services
Fax: 713/000-0000
Notices may abe given by hand, electronic transmission, mail or courier. Notices
shall be deemed given upon the date the notice is sent. Either Party may change
its address or telecopy number for notices hereunder by providing written notice
of such change to the other Party.
10. Assignment. Any individual or entity which shall succeed by purchase,
merger or consolidation of the properties of Transco or Atlanta shall be
entitled to the rights and shall be subject to the obligations of its
predecessor in title under this Precedent Agreement. Either Party may, without
prior consent of the other Party, pledge, mortgage or assign its rights
hereunder as security for its indebtedness; otherwise, any assignment of this
Precedent Agreement or any of the rights and obligations hereunder shall be void
and of no force or effect unless the assigning Party first obtains the consent
thereto in writing of the other Party. With respect to the foregoing sentence,
Atlanta and Transco hereby agree to execute and deliver to any pledgee or
mortgagee of the other
5
Party a consent to assignment to the extent such consent does not materially
alter any of the terms and conditions of this Precedent Agreement. Any
assignment hereof shall be subject to the receipt and acceptance by Transco of
any necessary regulatory or governmental authorizations. This Precedent
Agreement shall be binding upon and shall inure to the benefit of the respective
authorized successors and assigns.
11. Governing Law. This Precedent Agreement and any action, claims, demands
or settlements hereunder shall be governed by and construed in accordance with
the laws of the State of Texas, excluding, however, any conflicts of laws, rules
or principles which might require the application of the laws of another
jurisdiction. Any action or proceeding arising out of this Precedent Agreement
must be brought in the courts of the State of Texas with venue in the District
Courts of Xxxxxx County; provided, however, that to the extent a basis for
federal jurisdiction exists, Transco or Atlanta may in the alternative bring an
action in the United States District Court for the Southern District of Texas.
The Parties irrevocably waive any objections they might otherwise have to such
jurisdiction or venue, whether on the grounds of inconvenience or otherwise, and
any rights they might otherwise have to bring action in other jurisdiction or
venue.
12. Third Persons. Except as expressly provided in this Precedent
Agreement, nothing herein expressed or implied is intended or shall be construed
to confer upon or to give any person not a Party hereto any rights, remedies or
obligations under or by reason of this Precedent Agreement.
13. Laws and Regulatory Bodies. This Precedent Agreement and the
obligations of the Parties hereunder are subject to all applicable laws, rules,
orders and regulations of governmental authorities having jurisdiction and, in
the event of conflict, such laws, rules, orders and regulations of governmental
authorities having jurisdiction shall control.
14. Captions. The titles to each of the paragraphs in this Precedent
Agreement are included for convenience of reference only and shall have no
effect on, or be deemed as part of the
6
text of this Precedent Agreement.
15. Severability. Any provision of this Precedent Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of that prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of that provision in any other jurisdiction.
16. Further Assurances. Each Party agrees to execute and deliver all such
other and additional instruments and documents and to do such other acts as may
be reasonably necessary to effectuate the terms and provisions of this Precedent
Agreement.
IN WITNESS WHEREOF, the Parties have executed this Precedent Agreement, in
duplicate originals, as of the date first above written.
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Vice President, Customer Service
ATLANTA GAS LIGHT COMPANY
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Executive Vice President & Chief Operating Officer
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EXHIBIT A
Specified Receipt Points
Atlanta Gas Light Company
Transportation Contract Quantity: 85,000 DT/D
Receipt Points Maximum Daily Quantity at Each Receipt
Point(1)
Point of interconnection between Transco's 85,000 Dt/D
mainline and Mobile Bay Lateral at milepost
784.66 in Choctaw County, Alabama
(1) These quantities do not include the additional quantities of gas to be
retained by Transco for compressor fuel and line loss make-up. Therefore,
Atlanta shall also deliver or cause to be delivered at the receipt points such
additional quantities of gas to be retained by Transco for compressor fuel and
line loss make-up.
8
Exhibit B
Specified Delivery Points
Atlanta Gas Light Company
Transportation Contract Quantity: 85,000 Dt/D
Delivery Points Maximum Daily Quantity at Each Delivery
Point(2)
Suwanee 85,000
(2) Deliveries to or for the account of Atlanta at the delivery point(s) shall
be subject to the limits of the Delivery Point Entitlements ("DPEs") at such
delivery points, as such DPEs are set forth in Transco's FERC Gas Tariff as
amended from time to time.
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TRANSCONTINENTAL GAS PIPELINE CORPORATION
0000 Xxxx Xxx Xxxxxxxxx
P.O. Box 1396
Houston, TX 77251-1396
000-000-0000
February 19, 1997
Xx. Xxxxxx X. Xxxxxx
Senior Vice President and Chief Operating Officer
Atlanta Gas Light Company
000 Xxxxxxxxx Xxxxxx, X. X.
Atlanta, GA 30308-3249
Re: 1998 Cherokee Expansion Project
Dear Xx. Xxxxxx:
Transcontinental Gas Pipe Line Corporation ("Transco") and Atlanta Gas Light
Company ("Atlanta") are parties to a Precedent Agreement dated February 28 ,
1997, providing the terms and conditions for Atlanta's subscription to 85,000 dt
per day of firm transportation service under Transco's 1998 Cherokee Expansion
Project. Atlanta has requested that it be permitted to terminate the Precedent
Agreement in the event it is unable to secure gas supply arrangements at the
point of receipt set forth in the Precedent Agreement. Transco is agreeable to
Atlanta's request, subject to certain conditions. Accordingly, Transco and
Atlanta hereby agree as follows:
1. If Atlanta has not secured, on or before any one of the respective dates
set forth below (each such date is respectively referred to as a "Notice
Date"), arrangements with one or more sellers of natural gas which in total
will provide at least two years of natural gas supplies for Atlanta's firm
transportation capacity under the 1998 Cherokee Expansion Project, Atlanta
shall have the right to terminate the Precedent Agreement by (i) providing
written notice of termination to Transco on or before a Notice Date
(referred to as the "Applicable Notice Date" and (ii) delivering, on or
before the Applicable Notice Date, payment of the reimbursement amount set
forth below which corresponds to the Applicable Notice Date. Upon Transco's
receipt of timely delivered termination notice and reimbursement amount, if
any, the Precedent Agreement shall automatically terminate.
Xx. Xxxxxx X. Xxxxxx
Atlanta Gas Light Company
February 19, 1997
Page 2
Notice Date Reimbursement Amount(1)
March 31, 1997 None
April 30, 1997 $360,000
May 31, 1997 $550,000
June 30, 1997 $1,000,000
2. Notices under this letter agreement shall be in writing and shall be
addressed as follows:
If to Atlanta:
Xxxxxx X. Xxxxxx
Senior Vice President and Chief Operating Officer
Atlanta Gas Light Company
000 Xxxxxxxxx Xxxxxx, X. X.
Atlanta, GA 00000-0000
Fax: 404/000-0000
If to Transco:
Transcontinental Gas Pipe Line Corporation
0000 Xxxx Xxx Xxxxxxxxx
P. O. Box 1396
Houston, Texas 77251-1396
Attention: Director, Project Development
Fax: 713/000-0000
Notices may be delivered by fax, and notices shall be deemed delivered
upon receipt by the receiving party. Either party may change its address or
fax number for notices hereunder by providing written notice of such change
to the other party.
3. This letter agreement shall be effective as of the date first above written.
(1) In addition to the reimbursement amount, Transco shall have the right to
retain Atlanta's $50,000 prepayment (plus accrued interest) submitted with
Atlanta's request for service under the project.
Xx. Xxxxxx X. Xxxxxx
Atlanta Gas Light Company
February 19, 1997
Page 3
4. This letter agreement shall be governed by the laws of the State of Texas.
5. Any assignment of this letter agreement by either party to an entity other
than an affiliate shall be void and of no force or effect.
If the foregoing is agreeable to Atlanta, please execute both originals of this
letter agreement and return them to Transco. Upon receipt, Xxxxxxx will execute
both duplicate originals and return one for Atlanta's records.
Sincerely,
TRANSCONTINENTAL GAS PIPE LINE
CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Vice President, Customer Service
Accepted and Agreed:
ATLANTA GAS LIGHT COMPANY
By:/s/Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Executive Vice President and Chief Operating Officer
