Northern Natural Gas Company

Fifth Revised Volume No. 1

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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,