Northern Natural Gas Company
Fifth Revised Volume No. 1
Contents / Previous / Next / Main Tariff Index
Effective Date: 04/01/1998, Docket: RP93-206-019, Status: Effective
Fifth Revised Sheet No. 245 Fifth Revised Sheet No. 245 : Effective
Superseding: Fourth Revised Sheet No. 245
GENERAL TERMS AND CONDITIONS
24. STRANDED ACCOUNT NO. 858 COST RECOVERY MECHANISM
A. General. This Section 24 describes the procedures by which Northern's effective Firm
Throughput Services charges and rates will reflect Northern's recovery of Stranded
Account No. 858 Costs. Northern will file for recovery of Stranded Account No. 858
Costs in limited Section 4 filings. For purposes of this section, "Stranded Costs"
include those actual costs for which Northern has incurred an obligation to pay under
Canadian and domestic Account No. 858 transportation agreements which Northern is
unable to assign under Sections 22 and 23 of the GENERAL TERMS AND CONDITIONS of this
Tariff or agreements previously assigned or released (on a permanent or a temporary
basis) under Sections 22 and 23 that revert to Northern pursuant to the provisions of
the assignment or due to non-performance of the assignee, as well as transition or
stranded costs billed to Northern by upstream pipelines, costs of net TFF capacity
reductions related to Carlton commitments and appropriate carrying costs as described
below. Costs recoverable hereunder shall include, but not be limited to, as-billed
demand, and commodity costs and fuel, as well as costs incurred by Northern to buy out,
buy down, or otherwise reform transportation agreements. Any buyout, buydown or other
reformation would be amortized over the remaining term of the Account No. 858
agreement unless agreed to be amortized over a shorter period by Northern and the
parties. However, if the cost of the buyout is equal to less than twelve months of
demand charges under the contract, then the amortization period shall be twelve months.
All parties retain the right to challenge the prudence of any buyout or buydown cost.
In the event Northern reforms any transportation agreement, Northern will offer the
agreement for assignment to any shipper paying the 858 Stranded Cost Surcharge prior
to Northern being able to retain the contract for its market-based service.
B. Stranded Cost Allocation. The initial Stranded Cost allocation is applicable to all
firm Part 284 agreements in effect, on November 1, 1993, with terms remaining of one
(1) year or more. The allocation shall utilize the peak day contract entitlement for
each Shipper as a percent of the total weighted contract entitlement of all Shippers
except for Small Customers, whose allocation shall be each Small Customer's Weighted
Average Peak Day Entitlement as a percent of the total weighted contract entitlement of
all Shippers. The allocation to Rate Schedule GS-T shall utilize the weighted average
peak day of the entitlements underlying Rate Schedule GS that were in effect prior to
November 1, 1993, as a percent of the total weighted contract entitlement for all
Shippers. Allocations to any Field Area firm agreement shall be adjusted to reflect a
weighting for mileage according to the following formula: contracts with an average
rate of $0.00-0.06 will be weighted by a factor of 0.3; an average rate of $0.061-0.12
will be weighted by a factor of 0.6; an average rate greater than $0.12 will be
weighted at 1.0. All Field Area firm agreements which involve ultimate deliveries in
the Market Area will not be included in such allocation to avoid double counting.
Agreements for firm Part 284 transportation which were discounted prior to the issuance
of Order No. 636 and which do not permit Northern the opportunity to collect Order No.
636 transition cost surcharges will be exempt. In the event a new agreement is
discounted, the entitlement to be included in the allocation will be adjusted such that
the sum of the resulting Stranded Costs and any other transition costs allocated
thereto will not exceed fifty percent (50%) of the discounted reservation charge.
During the November 1 through March 31 heating season, any discounted revenues not
allocated to stranded costs shall be applied first to assure collection of the full
Carlton surcharge of $0.04 per MMBtu before any such discounted revenues may be applied
to Northern's base reservation and commodity rates. The Stranded Cost allocation will
be redetermined in each Quarterly Filing described herein to reflect any revised
allocation necessary as a result of new Part 284 firm agreements with a term of one (1)
year or more, as well as contract entitlement reductions or terminations under existing
Part 284 firm agreements. New firm Part 284 contracts with a term of less than one (1)
year will not be reflected in the GSR redetermination; however, if such contracts are
renewed in any part, then such renewal will be included in the allocation for the
period they are in effect prospectively. Small Customers shall not be subject to
allocation of costs or revenues related to TFF capacity provided in Paragraph A of this
Section 24.
Each Shipper's allocated share of Stranded Costs shall be billed monthly to such
Shipper over a three (3) month period in the form of an incremental Stranded Cost
Demand Surcharge. The surcharge will be derived by dividing the Shipper's total
allocated Stranded Costs amount, by three (3) times the Shipper's peak day contract
entitlement. To determine the monthly billing for Rate Schedule GS-T Shippers,