Columbia Gas Transmission LLC

Third Revised Volume No. 1

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Effective Date: 03/03/2009, Docket: RP09-340-000, Status: Effective

Original Sheet No. 392 Original Sheet No. 392

 

GENERAL TERMS AND CONDITIONS (Cont'd)

 

42. Contract Demand Reduction Option

 

(a) Any Shipper receiving service under a firm transportation and/or storage Service Agreement(s)

with Transporter (whether the service is provided at a Negotiated Rate, Recourse Rate, or a discount to the

Recourse Rate) with a remaining term of at least five years, and any Shipper that will receive service under a

firm transportation and/or storage Service Agreement with Transporter (whether the service is provided at a

Negotiated Rate, Recourse Rate, or a discount to the Recourse Rate) with an initial term of at least five

years, may mutually agree with Transporter to obtain a right to a contract demand reduction ("Reduction

Option") in its Service Agreement(s) upon the occurrence of "Regulatory Restructuring" as defined below. Once

mutually agreed to and inserted in its Service Agreement(s), a Shipper may exercise its Reduction Option at

any time all of the prerequisite terms and conditions set forth below are met. A contract demand reduction as

that term is used in this Section 42 means, for firm transportation service agreements, a "Transportation

Demand" reduction and, for firm storage Service Agreements, a "Storage Contract Quantity" and "Maximum Daily

Storage Quantity" reduction. For purposes of this Section 42, the following definition and associated terms

and conditions of Shipper eligibility apply:

 

Regulatory Restructuring: Regulatory Restructuring is defined as an event in which a local

distribution company Shipper is required by a final order of a state regulatory agency with

authority to regulate the rates and services of such local distribution company Shipper ("State

Commission") to provide separate merchant and transportation services pursuant to a retail

access or competitive choice program, and both of the following events occur: (1) such State

Commission does not approve a mechanism which provides Shipper the opportunity to recover fully

all costs incurred by Shipper under Shipper's Service Agreement(s), notwithstanding Shipper's

reasonable efforts to seek State Commission approval of a mechanism that allows Shipper the

opportunity to recover such costs; and (2) the Shipper is unable to fully recover all of its

costs by releasing such Service Agreement(s), including any existing discounted or negotiated

rate agreements, pursuant to the capacity release provisions of Transporter's Tariff in whole

or in part, at both the rate provided for under the Service Agreement(s) (or a greater rate)

and for the full remaining term of that service agreement(s). The contract demand of an

individual Service Agreement subject to reduction under this Regulatory Restructuring reduction

provision shall be that portion as to which the State Commission denies Shipper cost recovery

and which portion cannot be released or assigned at the rates provided under such Service

Agreements (or a greater rate) and for the full remaining term of that Service Agreement(s). If

a local distribution company Shipper is also served by other natural gas pipelines in addition

to Transporter, the contract demand subject to reduction on Transporter shall be a pro rata

amount based on the respective levels of firm transportation service that Shipper holds on

Transporter and such other natural gas pipelines; provided, if a local distribution company

Shipper can show (1) that it entered into a Service Agreement(s) with another pipeline solely

to transport supplies to a location unrelated to load lost as a result of Regulatory

Restructuring and (2) that the Shipper has never used the Service Agreement(s) with the other

pipeline to supply the load lost as result of Regulatory Restructuring, then the capacity

associated with such Service Agreement(s) will be excluded from the pro-rata calculation.

 

(b) If a Regulatory Restructuring Reduction Option is implemented pursuant to Section 42(a), Shipper

must implement the Reduction Option under its firm storage Service Agreement(s) and its related firm

transportation Service Agreement(s) on a proportionate basis so that storage service quantities, including

storage capacity and deliverability quantities, and related transportation service quantities, remain

proportionately the same. In addition, unless otherwise agreed to by Transporter and Shipper, Shipper may only

implement a Reduction Option under its firm storage Service Agreement(s) and its related firm transportation

Service Agreement(s) to be effective as of March 31 of any given Service Agreement year.