Columbia Gulf Transmission Company

Second Revised Volume No. 1

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Effective Date: 10/19/2006, Docket: RP06-596-000, Status: Effective

Second Revised Sheet No. 171 Second Revised Sheet No. 171 : Effective

Superseding: First Revised Sheet No. 171

GENERAL TERMS AND CONDITIONS (Continued)

 

 

9.5 Creditworthiness of Shipper.

 

(a) Subject to the provisions of paragraphs (b) and (c) below, Transporter shall not be

required to provide or to continue to provide service on behalf of any Shipper that (i) is or has become

insolvent, (ii) has applied for bankruptcy under Chapter 11 of the Bankruptcy Code or is subject to similar

proceedings under State or Federal Law, or (iii) fails, in Transporter's reasonable judgment, to demonstrate

minimal creditworthiness for all or any part of the service requested, based upon Transporter's consideration

of available credit data concerning Shipper and Shipper's past payment history, financial statements, and

credit reports.

 

(b) Criteria for Creditworthiness Determination

 

(1) Acceptance of a Shipper’s request for service and the continuance of service are

contingent upon the Shipper satisfying, on an on-going basis, a credit appraisal by Transporter.

 

(2) Transporter shall apply consistent evaluation practices to all similarly situated

Shippers to determine the Shipper’s financial ability to satisfy the payment obligations due to

Transporter over the term of the requested Service Agreement.

 

(3) A Shipper will be deemed creditworthy if

 

(i) its long-term unsecured debt securities are rated at least BBB by Standard &

Poor's Corporation ("S&P") or Baa2 by Moody's Investor Service ("Moody's"); and

 

(ii) Shipper's short-term and long-term outlook opinion is Stable or Positive from

S&P or Moody's; and

 

(iii) the net present value of the sum of reservation charge fees, utilization fees,

and any other associated fees for the contract term is less than 3% of Shipper's tangible

net worth.

 

As used herein, “tangible net worth” shall be the sum of the capital stock, paid-in capital in excess of par

or stated value, and other free and clear equity reserve accounts less goodwill, patents, unamortized loan

costs or restructuring costs and other intangible assets. If Shipper is rated by multiple agencies, the lower

rating applies. A Shipper that is not rated by S&P or Moody's may use its parent's rating if a guarantee

acceptable to Transporter is provided. If the Shipper has multiple Service Agreements with Transporter, then

the total of all those Service Agreements shall be considered in determining creditworthiness.

 

Transporter reserves the right to determine in its reasonable discretion, that a Shipper who requests new

service is not creditworthy to receive that service on the basis that Shipper has outstanding payments due on

invoices rendered by Transporter on current or past Service Agreements and Shipper has defaulted on those

payments per the terms of the General Terms and Conditions; provided, however, this provision shall not affect

amounts disputed by Shipper in good faith. This Section shall apply solely to the Shipper that is the contract

holder.

 

(4) If Shipper does not meet the criteria described above then, Shipper may have the

Transporter evaluate its creditworthiness based upon the level of service requested. That credit

appraisal shall be based upon Transporter's evaluation of the following information and credit

criteria:

 

(i) S&P and Moody's opinions, watch alerts, and rating actions will be considered in

determining creditworthiness.

 

(ii) Consistent financial statement analysis will be applied by Transporter to

determine the acceptability of Shipper's current and future financial strength. Shipper's

balance sheets, income statements, cash flow statements, and auditor's notes will be

analyzed along with key ratios and trends regarding liquidity, asset management, debt

management, debt coverage, capital structure, operational efficiency, and profitability.