Northern Natural Gas Company
Fifth Revised Volume No. 1
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Effective Date: 11/01/1993, Docket: RS92- 8-004, Status: Effective
Original Sheet No. 239 Original Sheet No. 239 : Effective
GENERAL TERMS AND CONDITIONS
D. Election. After the process in C. is complete, each Part 284 firm shipper receiving
an allocation may elect to either take permanent assignment of its remaining
allocated share of each contract or to turn back all or a portion of its remaining
allocated share to Northern to be included in the reverse auction. Each Part 284
firm Shipper receiving an allocation may elect to take permanent assignment of, on a
no cost basis, all or any portion of the ANR Rate Schedule X-59. In the event ANR
Rate Schedule X-59 needs to be allocated among requesting Shippers, the allocation
will use each Shippers peak day entitlement, as provided in paragraph B(3) above,
divided by the total peak day entitlement of all Shippers wanting the ANR Rate
E. Open Season for Assignment. After the elections in D. above, Northern will hold an
open season to attempt to assign the remaining portions of any unassigned contracts
to any interested creditworthy party on a no cost basis.
F. Contracts in Reverse Auction. The unassigned portions of the contracts remaining
after the close of the open season in E, will be subject to a reverse auction. The
contracts available for bid and the terms and conditions of the reverse auction will
be posted on Northern's Electronic Bulletin Board (EBB).
Any creditworthy party may bid during the reverse auction the amount of payment which
it would require as consideration for taking assignment of all or any portion of the
contracts available for bid effective November 1, 1993.
To minimize transition costs, Northern may withdraw a contract from the reverse
auction after the close of bidding if Northern believes it is able to buy out or
reform the contract for less than the lowest reverse auction bid posted. However, in
such instance, Northern will be permitted to recover as a Reverse Auction Cost only
the lesser of any amount spent to reform the contract or the lowest reverse auction
bid posted. If no bids are received during the Reverse Auction, until such contract
is assigned, bought out or reformed, Northern may recover costs associated with its
performance under such contract as price differential under the GSR Cost Recovery
Mechanism as described in Section 25 or as an Account 858 Stranded cost as described
in Section 24 as appropriate. Any buyout or reformation costs associated with such
contracts may be recovered as Reverse Auction cost. However, any shipper who
retained their initial allocation or Small Customers would not be subject to the cost
of other unassigned Account No. 858 capacity or price differential related to such
unassigned contracts as described in Section 24 and 25 of these GENERAL TERMS AND
At the conclusion of the reverse auction, Northern will assign the remaining
contracts to the lowest bidders (successful bidders) except as set forth in Appendix
G of the Global Settlement. The payments made by Northern to successful bidders
shall be treated and recovered as Reverse Auction Cost as more specifically described
in Section 22A of the GENERAL TERMS AND CONDITIONS and may be subject to a prudence
challenge as set forth in Article III, Section B.4.a. of the Global Settlement. The
prudence of any buyout, buydown or reformation claimed as a Reverse Auction Cost for
any contract withdrawn by Northern from the reverse auction may be challenged.
In the event Northern reforms a contract, Northern will offer the contract for
assignment to any shipper paying the reverse auction cost, prior to Northern being
able to retain the contract for its market-based service.
If a supplier does not consent to the assignment of two thirds (2/3) of each supply
contract, then no assignment(s) of that contract will be effectuated.
Northern has the right to "market-out" of or terminate certain gas supply contracts
prior to the expiration of the term of the related transportation agreements. Upon
the expiration of any such contract, the supplier thereunder shall have the right,
but not the obligation, to take assignment of the related transportation capacity.
In the event that any of Northern's suppliers do not exercise such right, subsequent
reverse auction(s) will be held, with assignments to be effective no later than
November 1, 1994, to assign any remaining transportation capacity. If subsequent
reverse auction(s) is held, each of the suppliers whose gas supply contract with
Northern has expired shall have a right to match any bid for the remaining
transportation capacity related to its expired contract.