Northern Natural Gas Company

Fifth Revised Volume No. 1

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Effective Date: 11/01/1993, Docket: RP94- 2-000, Status: Effective

First Revised Sheet No. 240 First Revised Sheet No. 240 : Effective

Superseding: Original Sheet No. 240

GENERAL TERMS AND CONDITIONS

 

22A. REVERSE AUCTION COST RECOVERY MECHANISM

 

A. General. This Section will set forth the procedures for recovery of the

Reverse Auction Costs as defined below.

 

Shippers taking assignment related to any contract subject to the Reverse

Auction will assume liability under the contract relating to the period

following the effective date of the assignment(s) and be subject to all of

the existing terms, conditions and obligations of the contract.

 

B. Reverse Auction Costs. With respect to the unassigned portions of each

individual contract subject to the Reverse Auction, under Section 22 of

these GENERAL TERMS AND CONDITIONS, a Reverse Auction Cost will be

established through the reverse auction process equal either to (i) the

lowest bid of a creditworthy party (successful bidder) made to take

assignment of such contract during the reverse auction, or, (ii) if Northern

withdraws a contract from the reverse auction after the close of bidding,

the lesser of the lowest bid made by a creditworthy party during the reverse

auction or the actual amount paid by Northern to reform or buyout the

contract. If no bids are received, the contract is not assigned during the

Reverse Auction, or if a contract previously assigned or released (on a

permanent or temporary basis) during the Reverse Auction reverts to Northern

pursuant to the provisions of the assignment or due to non-performance of

the assignee 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 until such contract is assigned or

bought out. Any buyout costs associated with such contracts may be

recovered as Reverse Auction cost. A Reverse Auction Cost will be

established in this manner for each contract subject to the reverse auction.

 

C. Reverse Auction Account. Northern will establish a separate Reverse Auction

Account for each Part 284 Shipper which is allocated a portion of a contract

in the Reverse Auction process (Responsible Shipper) as set forth in Section

22 of the GENERAL TERMS AND CONDITIONS.

 

Each Responsible Shipper's Reverse Auction Account will be debited with such

Shipper's appropriate share of the Reverse Auction Cost established for each

contract, only as costs are actually incurred by Northern. Northern will

determine each Responsible Shipper's share of the Reverse Auction Cost for a

contract subject to the Reverse Auction process in accordance with the

following procedure.

 

A Responsible Shipper which elects to take an assignment of its allocated

share of any contract or has traded its share to any other party will not be

responsible for any portion of the applicable Reverse Auction Cost incurred

in connection with a particular reverse auction associated with such

contract. Each Responsible Shipper which turns back any portion of its

allocated share of a contract for inclusion in the Reverse Auction shall be

responsible for ninety percent (90%) of their pro rata share of the Reverse

Auction Cost established for such contract based on the proportion of the

entitlement it turned back compared to the total entitlement turned back by

all Shippers.

 

Ten percent (10%) of Reverse Auction Cost associated with any Canadian gas

supply contract subject to the Reverse Auction shall be allocated to Rate

Schedule TI and recovered under the GSR Cost Recovery Mechanism pursuant to

Section 25 of these GENERAL TERMS AND CONDITIONS. None of the cost

associated with Account No. 858 transportation agreements subject to the

Reverse Auction will be recovered as GSR or via the TI Rate Schedule. For

purposes of this Section, Section 24 and 25 of the GENERAL TERMS AND

CONDITIONS, Northern and the parties to the Global Settlement have agreed

that the costs of both domestic and Canadian transportation agreements will

be deemed Account No. 858 costs.