(Letterhead of Etowah LNG Company)
Etowah LNG Company, L.L.C.
Xxxx Xxxxxx Xxx 0000
Xxxxxxxxxx, Xx 00000 2563
000 000 0000
Fax 000 000 0000
ETOWAH LNG COMPANY, LLC
April 20, 1998
Xx. Xxxxxx X. Xxxxxx
Atlanta Gas Light Company
Xxxx Xxxxxx Xxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Re: Etowah LNG Company, L.L.C.
Precedent Agreement
Dear Xx. Xxxxxx:
Enclosed for your records is one fully executed copy of the Precedent
Agreement dated April 16, 1998 between Etowah LNG Company, L.L.C. and Atlanta
Gas Light Company.
Very truly your,
s/s Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
Attorney for Southern Natural
Gas Company, as Administrator of
Etowah LNG Company, L.L.C.
JDJ:bkl
Enclosures
cc: Xxx Xxxxxxx
Xxxx Xxxxxxx
PRECEDENT AGREEMENT
This Precedent Agreement is made and entered into as of the _____day
of April, 1998 by and between ETOWAH LNG COMPANY, L.L.C., a Delaware
limited liability company, herein called "Company," and Atlanta Gas Light
Company, a Georgia corporation, herein called "Customer," pursuant to the
following terms, conditions, and representations:
RECITALS:
A. Company is a Delaware limited liability company formed by Southern
Natural Gas Company, a Delaware corporation ("Southern"), and AGL Peaking
Services, Inc., a Georgia corporation ("AGL"). This Precedent Agreement may
refer to Southern and AGL individually as a "Member" and jointly as the
"Members."
B. Company will file an application with the Federal Energy Regulatory
Commission ("FERC") on or about April 15, 1998 for Certificates of Public
Convenience and Necessity authorizing Company to construct and operate
natural gas liquefaction, storage, and vaporization facilities, herein
called "Company's Facility," located in Polk County, Georgia and
interconnected with the pipeline systems of Southern and Atlanta Gas Light
Company; and
C. As provided below, this Precedent Agreement binds Company and
Customer to enter into an LNG-1 Service Agreement, substantially in the
form attached as Exhibit A hereto (as approved by the FERC), to effect firm
service through Company's Facility
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pursuant to the terms of this Precedent Agreement.
AGREEMENTS:
In consideration of the mutual covenants set forth in this agreement,
and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Company and Customer agree as follows:
1. Company shall seek the contractual and property rights, financing
arrangements, and regulatory approvals, including from the FERC all
necessary authorizations under the FERC's Regulations under the Natural Gas
Act (FERC Authorization), as may be necessary to construct Company's
Facility and to render service under Rate Schedule LNG-1. Company reserves
the right to file and prosecute applications for any required
authorizations, any supplement or amendment to an application, and any
court review as Company deems in its best interests. Customer agrees to use
its good faith efforts to cooperate with and support Company in obtaining
the necessary regulatory approvals. Customer's cooperation and support
includes, without limitation, (i) filing with the FERC in support of
Company's application for certificate authorization, and (ii) providing to
Company any information that the FERC requires relating to Customer's gas
supply arrangements or markets in a timely manner to enable Company to
respond within the time imposed by the FERC; provided, however, that
Company shall at Customer's request seek confidential treatment of such
information. Customer agrees that Company may provide copies of this
Precedent Agreement to Company's Members that have agreed not to disclose
this Precedent Agreement to others. Under no circumstances, however, may
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Company provide copies of this Precedent Agreement to any marketing
affiliate of the Members.
2. Upon receipt by Company of the FERC Authorization described in
Paragraph 1, Company shall transmit to Customer a copy of such
authorization. Within 20 days of receipt by Company of its FERC
Authorization, Company shall notify Customer of Company's decision to
accept or reject such authorization.
3. If Company accepts its FERC Authorization, then within 30 days
Company and Customer shall execute and deliver an LNG-1 Service Agreement
that provides for (i) a Maximum Daily Vaporization Quantity (MDVQ) of
200,000 Mcf per day, (ii) a Primary Delivery Point (subject to change by
mutual agreement and according to Company's FERC approved tariff) at the
interconnect between Company's Facility and Customer's Facility, and (iii)
a primary term of 20 years from the in-service date, subject to Paragraph
8(a); provided, however, that Company's obligation to provide service
pursuant to the executed Service Agreement remains subject to Company's
receipt and acceptance of any remaining necessary contractual and property
rights, financing arrangements, and regulatory approvals, in form and
substance satisfactory to Company. Any other provision of this Paragraph 3
to the contrary notwithstanding, Customer and Company agree that the
obligations, agreements, and representations in this Precedent Agreement
remain subject to the following (PSC-Out): if Customer (i) files a bona
fide Gas Supply Plan, which includes among other things the service for
which Customer has subscribed from Company (Storage Service), with the
Georgia Public Service Commission (PSC) on or
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before August 1, 1998: (ii) pursues, on a best-efforts basis, approval of
the Gas Supply Plan; and (iii) has received from the PSC, by September 15,
1998, order(s) rejecting, disapproving, or excluding those portions of the
Gas Supply Plan that specifically relate to the Storage Service, then
Customer may terminate this Precedent Agreement if Company receives a
written notice of termination, enclosing a copy of the applicable order(s)
from the PSC, by September 30, 1998; provided, however, that if Customer
does not file the Gas Supply Plan with the PSC on or before August 1, 1998
(or if Company has not received the specified notice of termination by
September 30, 1998),then this PSC-Out shall become null and void and have
no effect, and the other provisions of this Precedent Agreement shall
continue with full force and effect. If Customer terminates this Precedent
Agreement pursuant to this PSC-Out, then such termination relieves Customer
and Company of further liability; provided, however, that Customer agrees
to reimburse Company for all actual costs, including without limitation (i)
expenses incurred in the design and engineering of the Facility, (ii)
expenses incurred in preparing for regulatory approvals, (iii) the cost of
all land and materials, and (iv) an after-tax carrying charge of 7% on all
such actual costs. Upon reimbursement, Company agrees to convey its
interest in any land acquired for the Facility to Customer or to another
entity that Customer designates.
4. Company will file for a maximum monthly Reservation Charge not to
exceed $5 per Dth of MDVQ under Rate Schedule LNG-1. Customer's obligation
to pay the maximum monthly Reservation Charge and other charges, and
Company's obligation to
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perform according to its tariff, as approved by the FERC, shall commence as
soon as the Company's Facility has been constructed and is ready for
liquefaction and storage, as determined by Company in its sole opinion.
Company agrees that except for adjustments to its fuel retention percentage
and any industry-wide surcharges imposed by the FERC, Company shall not
file a general rate increase pursuant to Section 4 of the Natural Gas Act
(NGA) before the end of the three-year period beginning on Company's
in-service date, as described in Paragraph 8(a); provided, however, that
Company may, upon written notice to Customer, terminate this rate
moratorium and file a general rate change pursuant to Section 4 of the NGA
if, a result of legislation or action of the FERC (or other government
agency having jurisdiction), Company is required to change the cost
allocation, rate design, services, or billing determinants in a manner that
materially and adversely affects Company's ability to recover its cost of
service.
5. Nothing in this Precedent Agreement shall be deemed or construed to
limit either (i) Company's ability to file with FERC to increase its
maximum lawful rates by the full amount of the actual initial capital costs
of the Company's Facility, or (ii) Customer's right to oppose such filing.
6. No modification of the terms and provisions of this Precedent
Agreement shall be made except by the execution of written agreements by
Company and Customer.
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7. Notices under this Precedent Agreement shall be sent to:
Company: Etowah LNG Company, L.L.C.
Xxxx Xxxxxx Xxx 0000
Xxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx
Phone: 205/000-0000
Fax: 205/000-0000
Customer: Atlanta Gas Light Company
Xxxx Xxxxxx Xxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxx
Phone: 404/000-0000
Fax: 404/000-0000
Either party may change its address by written notice to that effect to the
other party. Notices given hereunder shall be deemed to have been
effectively given upon the third day following the day when the notice
properly addressed and postpaid has been placed in the United States mail,
or upon confirmation of receipt if delivered by facsimile or other similar
means, or in accordance with the dates and time provided for overnight
delivery service.
8. Customer and Company acknowledge and agree to the following:
(a) After Company and Customer execute and deliver the LNG-1
Service Agreement, and after Company receives and accepts
all necessary contractual and property rights, financing
arrangements, and regulatory approvals, in form and
substance satisfactory to Company, Company shall proceed
with the construction of Company's Facility so as to begin
liquefaction and storage for Customer by a proposed
in-service
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date of March 1, 2001. If Company is unable to complete the
construction and place the Company's Facility into operation
by the proposed in-service date despite its exercise of due
diligence, then Company shall continue to proceed with due
diligence to complete such construction and place Company's
Facility in-service at the earliest practicable date.
Company shall not be liable in any manner to Customer, nor
shall this Precedent Agreement or the LNG-1 Service
Agreement be subject to termination, if, despite Company's
exercise of due diligence, construction is not completed or
service is not commenced by the proposed in-service date.
(b) Company is a Delaware limited liability company.
(c) Customer shall have no recourse against any Member of
Company with respect to Company's obligations under this
Precedent Agreement or with respect to any agreements
executed pursuant to the terms hereof, and its sole recourse
shall be against the assets of Company, irrespective of any
failure to comply with applicable law or any provision of
this Precedent Agreement.
(d) No claim shall be made against any Member of Company under
or in connection with this Precedent Agreement or any
agreements executed pursuant to the terms hereof.
(e) Customer shall have no right of subrogation to any claim of
Company
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for any Capital Contributions from any Member of Company.
(f) The representations in (b) through (e) above are made
expressly for the benefit of the Members of Company.
9. If Company has not received and accepted the FERC Authorization on
or before January 31, 2000, then either Company or Customer may, at any
time thereafter until Company receives and accepts the FERC Authorization,
terminate this Precedent Agreement by giving 30 days' advance written
notice to the other; provided, however, that the termination has no effect
if Company receives and accepts the FERC Authorization within the 30-day
notice period. Termination shall be without liability for damages, costs,
or expenses of either Company or Customer to each other or others, or to
shareholders, directors, officers, employees, agents, or consultants of
Company or Customer.
10. THIS PRECEDENT AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA, WITHOUT REFERENCE TO
RULES FOR CONFLICTS OF LAW.
11.(a) Any company which shall succeed by purchase, merger, or
consolidation to the properties substantially as an entirety,
of either Company or Customer, as the case may be, shall be
entitled to the rights and shall be subject to the obligations
of its predecessor in title under this Precedent Agreement.
(b) Either party may, without the consent of the other party,
assign any of its rights hereunder to an entity with which it
is affiliated, but the
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assignor shall not be relieved of its obligations under this
Precedent Agreement. In the event of such assignment, the
assignor shall provide written notice of such assignment to
the other party to this Precedent Agreement as soon as
practicable after such assignment.
(c) In addition to the rights provided in Paragraph 11(b), if
Customer assigns any of its rights hereunder to an entity with
which it is affiliated and, prior to such assignment, obtains
the written consent thereto of Company, such consent not to be
unreasonably withheld, then Customer shall be relieved of its
obligations hereunder to the extent so assigned prospectively
from the effective date of the assignment (except for the
obligations to pay monies related to periods prior to the
assignment which become due before or after such date).
(d) Except as provided in Paragraph 11(b) hereof, no assignment of
this Precedent Agreement or any of the rights or obligations
hereunder shall be made unless there first shall have been
obtained the written consent thereto of Customer in the event
of an assignment by Company, or the written consent thereto of
Company in the event of an assignment by Customer, such
consent not to be unreasonably withheld.
(e) It is agreed, however, that the restrictions on assignment
contained in Paragraphs 11(a) through (d) above shall not in
any way present either party to this Precedent Agreement from
pledging or mortgaging its
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rights hereunder as security for its indebtedness.
(f) For purposes of this Precedent Agreement, "Affiliate" means,
with respect to any relevant entity, any other entity that
directly or indirectly controls, is controlled by, or is under
common control with, such relevant entity in question. As used
herein, the term "control" (including its derivatives and
similar terms) means owning or holding, directly or
indirectly, the power (i) to vote 10% or more of the Voting
Stock of any such relevant entity, or (ii) to direct or cause
the direction of the management and policies of any such
relevant entity. "Voting Stock" means capital stock issued by
a corporation, or equivalent interests in any other entity,
the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors
(or entity with management authority performing similar
functions) of such entity.
IN WITNESS WHEREOF, the parties hereto have caused this Precedent
Agreement to be duly executed by their proper officers thereunto duly
authorized as of the date first hereinabove written.
_____________________________ ETOWAH LNG COMPANY, L.L.C.
By: s/s Xxxxxx X. Xxxxxx By: s/s Xxx X. Xxxxxxx
Title: President Title:
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Date: 4/16/98 Date: 4/16/98
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EXHIBIT A
Precedent Agreement - LNG-1
(------------------)
FORM OF SERVICE AGREEMENT
(For Use Under Rate Schedule LNG-1)
THIS AGREEMENT entered into this ______day of ____________by and between
Etowah LNG Company, L.L.C (Etowah) and
_______________________________(Customer).
W I TNE S S E T H:
WHEREAS, Etowah has undertaken to provide services of liquefaction,
storage, and vaporization of natural gas under Part 284 of the Federal Energy
Regulatory Commission's (Commission) Regulations; and
WHEREAS, Customer has requested service pursuant to Rate Schedule LNG-1
and has submitted to Etowah a request for such service in compliance with
Section 2 of Rate Schedule LNG-1; and
WHEREAS, Etowah agrees to render service to Customer pursuant to the
provisions of Rate Schedule LNG- 1, this Agreement, and Commission's
Regulations.
NOW, THEREFORE, Etowah and Customer agree as follows:
ARTICLE I
SERVICE TO BE RENDERED
Subject to the terms and provisions of both this agreement and Etowah's
Rate Schedule LNG-1, as amended from time to time, Etowah agrees to liquefy
natural gas, delivered to Etowah by Customer pursuant to Article II; store such
gas in liquefied form; and vaporize and deliver such gas to Customer or for
Customer's account, as follows:
To withdraw from storage and vaporize the gas stored in liquefied form
by Etowah for Customer's account up to a maximum quantity of _____Mcf, which
quantity shall be Customer's Maximum Daily Vaporization Quantity (MDVQ).
To liquefy natural gas for Customer up to a maximum quantity on any day
of 5% of MDVQ, which equals Customer's Maximum Daily Liquefaction Quantity
(MDLQ).
To store in liquefied form for Customer's account up to a total
quantity of 833% of MDVQ, which equals Customer's Maximum Storage Capacity
(MSC).
ARTICLE II
POINT OF RECEIPT AND DELIVERY
1. Point of Receipt
Subject to the terms and provisions of both this Agreement
and Etowah's Rate Schedule LNG-1 and the General Terms and Conditions
thereto, Etowah agrees to accept at the Receipt Point on any day a
quantity of gas up to Customer's MDLQ.
2. Point of Delivery
Subject to the terms and provision of both this Agreement
and Etowah's Rate Schedule LNG-1 and the General Terms and Conditions
thereto, Etowah agrees to deliver to Customer at the Delivery Points
described in Exhibit A and Exhibit A-1 to this Agreement. Etowah's
obligation to deliver on a firm basis is limited to the Delivery Point
specified on Exhibit A and the MDVQ stated for that delivery point.
All quantities delivered in excess of MDVQ equal Authorized Excess
Vaporization, as defined in Section 6.1 (d) of Rate Schedule LNG-1.
ARTICLE III
TERM OF AGREEMENT
This agreement shall be effective as of _________________and shall
remain in force and effect until __________, and the year to year thereafter,
subject to termination by either party upon two (2) years prior written notice
to the other.
ARTICLE IV
RATE SCHEDULE AND PRICE
1. Customer shall pay Etowah for service rendered hereunder in
accordance with Etowah's Rate Schedule LNG-1 and the applicable provisions of
the General Terms and Conditions of Etowah's FERC Gas Tariff as filed with the
Commission, and as the same may be amended or superseded from time to time. Such
rate schedule and General Terms and Conditions are by this reference made a part
hereof.
2. Etowah shall have the unilateral right to propose, file , and make
effective with the Commission, or other regulatory authority having
jurisdiction, changes and revision to the rates and rate design proposed
pursuant to Section 4 of the Natural Gas Act, or to propose, file, and make
effective superseding rates or rate schedules, for the purposes of changing the
rates, charges, rate design, terms and conditions of service and other
provisions thereof effective as to Customer; provided, however, that the (i)
firm character of service, (ii) term of agreement (as set forth in Article III
above), (iii) quantities, and (iv) points of receipt and delivery shall not be
subject to unilateral change under this paragraph. Customer shall have the right
to file with the Commission or other regulatory authority in opposition to any
such filings or proposals by Etowah. This agreement does not alter pre-existing
rights under Section 5 if the Natural Gas Act.
ARTTICLE V
MISCELLANEOUS
1. The subject headings of the Articles of this agreement are inserted
for the purpose of convenient reference and are not intended to be a part of
this agreement nor to be considered in the interpretation of the same.
2. This agreement supersedes and cancels as of the effective date
hereof the following contracts between the parties hereto;
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3. No waiver by either party of any one or more defaults by the other
in the performance of any provisions of this agreement shall operate or be
construed as a waiver of any future default or defaults, whether of a like or
different character.
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4. This agreement shall be interpreted, performed, and enforced in
accordance with the laws of the State of Georgia, without reference to rules for
conflicts of law.
5. This agreement shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and assigns.
6. Notices to either party shall be in writing and shall be considered
as duly delivered when mailed to the other party at the following address:
(a) If to Etowah:
Etowah LNG Company, L.L.C.
Xxxx Xxxxxx Xxx 0000
Xxxxxxxxxx, Xxxxxxx. 00000
(b) If to Customer:
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Such addresses may be changed from time to time by mailing appropriate notice
thereof to the other party.
7. Customer acknowledges and agrees that (a) Company is a Delaware
limited liability company; (b) Customer shall have no recourse against any
member of Company with respect to Company's obligations under this agreement and
its sole recourse shall be against the assets of Company, irrespective of any
failure to comply with applicable law or any provision of this Agreement; (c) no
claim shall be made against any member of Company under or in connection with
this Agreement; (d) Customer shall have no right of subrogation to any claim of
Company for any Capital Contribution from any member of Company; and (e) this
representation is made expressly for the benefit of the members in Company.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to
be signed and sealed by their respective officers or representatives thereunto
duly authorized on any day and year above written.
ETOWAH LNG COMPANY, L.L.C.
By______________________________
[L.S]
CUSTOMER
By______________________________
[L.S]
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