Columbia Gulf Transmission Company

Second Revised Volume No. 1

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Effective Date: 07/01/2003, Docket: RP03-492-001, Status: Effective

Substitute Third Revised Sheet No. 272 Substitute Third Revised Sheet No. 272 : Effective

Superseding: Second Revised Sheet No. 272

 

GENERAL TERMS AND CONDITIONS (Cont'd)

 

34. Contract Demand Reduction Option

 

(a) Any Shipper receiving service under a firm transportation Service Agreement 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 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 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 34 means, for firm transportation Service Agreements, a

"Transportation Demand" reduction. For purposes of this Section 34, 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) Shipper must establish its entitlement to a Regulatory Restructuring Reduction Option by

demonstrating that the provisions of Section 34(a) have been met. For purposes of establishing the

requirement that Shipper cannot release the capacity under the provisions of Transporter's Tariff, Shipper

must demonstrate that the capacity has been posted on Transporter's EBB for thirty (30) days, and that no

Shipper has agreed to purchase the capacity, in whole or in part, at the rate provided for under the

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

Agreement(s). Shipper must provide Transporter with sixty (60) days written notice of its intent to

exercise the Regulatory Restructuring Reduction Option. The effective date of the Regulatory Restructuring

Reduction Option will be the latter of the effective date of the Regulatory Restructuring or the end of

the sixty (60) day written notice period. Transporter will utilize the sixty (60) days to verify that the

Shipper is entitled to the Regulatory Restructuring Reduction Option. If Transporter determines that

Shipper is not so entitled, Transporter will provide written notice as soon as possible, but in no event

later than 5 business days after the end of the initial sixty (60) day period.