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.